A Note on Public Goods Dependency
Kanbur, Ravi; Pottebaum, David
Why are rich countries rich? One factor, which has support in the empirical literature, is that they have more public goods like infrastructure, which allows more productive patterns of production and distribution. However, it has rarely been remarked that precisely because their activities have adjusted to the higher supply of public goods, richer economies may be more dependent on them and therefore more vulnerable to their destruction. This paper develops a formal model to capture this basic intuition, and to derive testable implications of this perspective on public goods dependency—predictions which, we argue, have empirical support.
WP 2002-05 February 2002JEL Classification Codes: O10; O15; H41
Charles H. Dyson School of Applied Economics and Management, Cornell University
public goods; vulnerability; war; natural disaster; post-conflict