"Transnational corporations are one of the most important actors in the global economy, occupying a more powerful position than ever before. In their persistent battle to maximize profits, they have increasingly turned to the developing world, a world that holds many attractions for them. But...

"The authors examine the empirical evidence in support of the poverty trap view of underdevelopment. They calibrate simple aggregate growth models in which poverty traps can arise due to either low saving or low technology at low levels of development. They then use these models to assess the...