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Unformatted text preview: where the income is low, hence the labor cost should make a country competitive. The answer is (a) the lack of information, (b) the lack of incentives, (c) the lack of trust, and (d) the lack of infra-structure, (e) there is great deal of externalities under which everything depends upon everything else, so that a logjam cannot be broken. All these one often takes for granted, in textbooks where one assumes that market is complete, and transaction cost does not exist. It is not a coincidence that only when a society is under some shock, so that the right type of reform can sweep away the usual obstacles, and all stakeholders can control their own opportunistic behavior, so that some sea-change can take place in the economic environment....
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This note was uploaded on 02/20/2009 for the course ECON 4730 taught by Professor Henrywan during the Fall '08 term at Cornell University (Engineering School).
- Fall '08