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 Rodrik

Evidence 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

Source

Dani Rodrik on Globalization, Development, and Employment 04/11/2011EconTalk
Created: 6/16/2026, 2:24:26 PM

My Notes

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