Information Accumulation in Development.

We propose a model in which economic relations and institutions in advanced and less developed countries differ as these societies have access to different amounts of information. The lack of information in less developed economies makes it hard to evaluate the performance of managers, and leads to high "agency costs". As well as factors related to the informational infrastructure, we emphasize that societies accumulate information by repeating certain tasks. Poor societies may therefore have less information partly because the scarcity of capital restricts the repetition of various activities.