Market failures—coordination failures (complementary inputs, infrastructure, cargo service all needing to exist simultaneously, a chicken-and-egg problem) and learning/cost-discovery externalities (the pioneer investor reveals whether the cost structure supports an industry but bears private costs while later entrants free-ride on the positive signal)—prevent the rise of new productive industries in poor economies.
causalpending
Speaker
Dani RodrikEvidence Quote
“the first investor who invests in aside a cardboard factory provides a very valuable signal to other potential investors... all the costs are private if you're successful then... you cannot fully internalize all the benefits”
Created: 6/16/2026, 2:24:26 PM
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