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The Macat Analysis of Robert E Lucas's Why Doesn't Capital Flow from Rich to Poor Countries

Narrated by: John Chancer

Author: Pádraig Belton

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At a Glance

Format
Digital Audiobook

Age
12 - 18

Duration
01:59.55

Published: 15th July 2017

Digital Audiobook

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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. Lucas analyzes the problem, focusing especially on the role of human capital—the skill and experience that people bring to their work. The Lucas paradox is important not just to economists, but to anyone interested in understanding how economic development works in poorer countries.