Economic activities in different industries are linked to each other through aggregate income (horizontal linkages) and input–output relationships (vertical linkages). Could such linkages give rise to vicious circles of underdevelopment or virtuous circles of development when there are increasing returns to scale at the firm level?
KeywordsCost linkages Demand linkages Horizontal and vertical linkages Increasing returns to scale Industrialization Input chains Linkages Multiple equilibria Pre-industrial production methods Underdevelopment traps
- Chenery, H., S. Robinson, and M. Syrquin. 1986. Industrialization and growth: A comparative study. New York: Oxford University Press.Google Scholar
- Hirschman, A. 1958. The strategy of economic development. New Haven, CT: Yale University Press.Google Scholar
- Krugman, P. 1993. Toward a counter-counterrevolution in development theory. In Proceedings of the World Bank annual conference on development economics, ed. L.H. Summers and S. Shah. Washington, DC: World Bank.Google Scholar
- Krugman, P. 1994. The fall and rise of development economics. In Rethinking the development experience: Essays provoked by the work of Albert O. Hirschman, ed. L. Rodwin and D.A. Schon. Washington, DC: Brookings Institution.Google Scholar
- Nurkse, R. 1953. Problems of capital formation in underdeveloped countries. New York: Oxford University Press.Google Scholar