Technological choice, financial markets and economic development

Gilles Saint-Paul

Research output: Contribution to journalArticlepeer-review


Capital markets make possible the spreading of risk through financial diversification. Without such markets, agents can limit risk only by choosing less specialized and less productive technologies (technological diversification). This interaction may lead to multiple equilibria. In the 'low' one, financial services are underdeveloped, and technology is unspecialized. The opposite is true in the 'high' equilibrium. The model is extended to account for multiple growth paths and divergence across identical countries.

Original languageEnglish (US)
Pages (from-to)763-781
Number of pages19
JournalEuropean Economic Review
Issue number4
StatePublished - May 1992

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


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