Vol 2, No 3 (2014)

Catch-up and Convergence: Mechanism Design for Economic Development

Hans Gottinger


This paper identifies factors that promote long-run sustainable economic growth and industrial catch-up in achieving superior performance. An informationally efficient mechanism design of the Hayek-Hurwicz type would contain as essential elements allocative efficiency with a limited state role, fostering of private entrepreneurship for high intensity dynamic competition through industry specific ‘technological racing’ within a supporting market structure, free trade and intellectual property rights (IPRs), flexible labour markets, low taxes on labour, capital income and profits. Emphasis on high value-added network industries directed toward increasing returns. If resource endowment among countries are similar these factors would eventually lead to convergence through catch-up performance, otherwise they would lead to divergence.

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Catch-Up; Convergence; Mechanism Design; Economic Development

Publication information

Volume 2, Issue 3
Year of Publication: 2014
ISSN: 1857 - 8721
Publisher: EDNOTERA

How to cite

Gottinger, H. (2014). Catch-up and Convergence: Mechanism Design for Economic Development. Journal of Applied Economics and Business, Vol 2, No. 3, 67-95.