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2002
Hausmann, R. & Rodrik, D., 2002. Economic Development as Self-Discovery.Abstract
In the presence of uncertainty about what a country can be good at producing, there can be great social value to discovering costs of domestic activities because such discoveries can be easily imitated. We develop a general-equilibrium framework for a small open economy to clarify the analytical and normative issues. We highlight two failures of the laissez-faire outcome: there is too little investment and entrepreneurship ex ante, and too much production diversification ex post. Optimal policy consists of counteracting these distortions: to encourage investments in the modern sector ex ante, but to rationalize production ex post. We provide some informal evidence on the building blocks of our model.
2002_econ_development_self_discovery_hausmann_rodrik.pdf
Hard Money's Soft Underbelly: Understanding the Argentine Crisis
Hausmann, R. & Velasco, A., 2002. Hard Money's Soft Underbelly: Understanding the Argentine Crisis. Brookings Trade Forum , pp. 59-104. Publisher's Version

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