History, coordination and optimality: Some policy lessons

Research output: Contribution to journalArticlepeer-review


Within a two-sector dynamic framework with external economies in one sector (which give rise to the possibility of multiple equilibria) and convex adjustment costs, this paper provides a welfare ranking of movements towards the two stable equilibria, solves for the optimal speed of industrialization and derives the shape of the social planner's optimal resource allocation path. These results show that one should be cautious in drawing policy implications from static models of coordination failures. Moreover, this paper also argues that a reduction in adjustment costs (e.g. through the provision of public education facilities) is an essential precondition for industrialization when the existing industrial base is thin.

Original languageEnglish (US)
Pages (from-to)185-193
Number of pages9
JournalJournal of International Trade and Economic Development
Issue number2
StatePublished - 1999
Externally publishedYes


  • Coordination failures
  • Government policy
  • Industrialization

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Development
  • Aerospace Engineering


Dive into the research topics of 'History, coordination and optimality: Some policy lessons'. Together they form a unique fingerprint.

Cite this