An Analysis of Robert E. Lucas Jr.'s Why Doesn't Capital Flow from Rich to Poor Countries?

Pádraig Belton (Autor)

Buch | Hardcover

112 Seiten

2017
Macat International Limited (Verlag)
978-1-912302-27-7 (ISBN)

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Because the potential returns appear to be greater in poorer countries than in the developed world, modern economic theory implies that rich countries should continually invest in poor countries until returns balance out. But this doesn’t happen – and economist Robert E. Lucas Jr. asked why in his ground-breaking 1990 article on what has become known as the Lucas paradox.

Robert Lucas is known among economists as one of the most influential macroeconomists of recent times – a reputation founded in no small part on the critical thinking skills displayed in his seminal 1990 paper ‘Why Doesn’t Capital Flow from Rich to Poor Countries?’

Lucas’s paper tackles a puzzle in economic theory that has since come to be known as the ‘Lucas paradox,’ and it deploys the author’s brilliant problem solving skills to explain why such an apparent paradox in fact makes sense. Classical economic theory makes a simple prediction of how capital flows between countries: it should, it states, flow from rich to poor countries, because of the law of diminishing returns on capital. Since poor countries have so little capital invested in them, the returns on new investment should be proportionally far better than investment in rich countries.

This should mean that investors seeking new opportunities will invest in poorer countries, making capital consistently flow from rich nations to poorer ones. But, problematically, this is not in fact the case. Having defined the problem, Lucas did what any good problem solver would: he looked critically at the criteria involved, and offered a series of possible solutions. Indeed, in just six pages, he puts forward four hypotheses to explain the paradox’s existence. The popularity of his paper, and the influence it has had, are also greatly magnified by careful reasoning embodied in Lucas’s marshalling of evidence and his explanations of the judgements he has made.

Pádraig Belton is completing his doctoral research in politics and international relations at the University of Oxford. A prolific financial, business and political journalist, his work has appeared in publications including the Irish Times, the Guardian, Telegraph, Independent, the Irish Independent, The Atlantic, the New Statesman, Prospect, the Times Literary Supplement, and Foreign Policy, as well as via the BBC.

Ways in to the Text Who was Robert E. Lucas Jr.? What does Why Doesn't Capital Flow from Rich to Poor Countries? Say? Why does Why Doesn't Capital Flow from Rich to Poor Countries? Matter? Section 1: Influences Module 1: The Author and the Historical Context Module 2: Academic Context Module 3: The Problem Module 4: The Author's Contribution Section 2: Ideas Module 5: Main Ideas Module 6: Secondary Ideas Module 7: Achievement Module 8: Place in the Author's Work Section 3: Impact Module 9: The First Responses Module 10: The Evolving Debate Module 11: Impact and Influence Today Module 12: Where Next? Glossary of Terms People Mentioned in the Text Works Cited

Erscheinungsdatum	26.07.2017
Reihe/Serie	The Macat Library
Verlagsort	London
Sprache	englisch
Maße	129 x 198 mm
Gewicht	360 g
Themenwelt	Geisteswissenschaften ► Psychologie ► Allgemeine Psychologie
	Sozialwissenschaften ► Pädagogik
	Wirtschaft ► Volkswirtschaftslehre
ISBN-10	1-912302-27-6 / 1912302276
ISBN-13	978-1-912302-27-7 / 9781912302277
Zustand	Neuware