P.T. Bauer boldly conjectured two hypotheses about the process of escaping poverty. First, he argued that foreign aid …

"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 empirical relevance of poverty traps and their consequences for policy. The …