The Voracity Effect: Comment

In an inuential article Tornell and Lane (1999) considered an economy populatedby multiple powerful groups in which property rights in the formal sectorof production are not protected. They obtained conditions under which thegroups appropriate output from the formal sector in order to invest it in aninformal sector in which productivity is lower and private property is protected.They also obtained conditions under which voracity occurs such thata permanent positive shock in the formal sector leads to lower growth...