Capital Mobility and Poverty Traps in a Convex Model of Growth

Capital Mobility and Poverty Traps in a Convex Model of Growth

We employ a convex model of growth, nesting both a neoclassical and endogenous growth regimes, as a framework for studying the contributions of capital accumulation to the widely documented divergence of international growth experiences. In particular, we study the importance of effective (physical) capital mobility in this respect. We show the conditions under which such mobility can give rise to what may be termed relative and absolute poverty traps. Greater effective capital mobility helps to deliver a greater global growth rate; but if unequally developed across countries, it can also help generate both relative and absolute poverty traps.