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    Potential Growth, Misallocation, and Institutional Obstacles: Firm-Level Evidence

    León-Ledesma, Miguel | April 2016
    Abstract
    One of the key determinants of potential growth are productivity gains. Total factor productivity (TFP) differences are the main determinant of per capita income differences between countries. A key factor to understand TFP is misallocation: the aggregate productivity loss from microeconomic distortions that prevent factors of production from being allocated to their optimal use. If misallocation is a key determinant of TFP differences, then reallocation of factors of production is a key driver of productivity gains. Since distortions preventing misallocation can be driven by institutional obstacles, then policies focused on the removal of these obstacles will affect potential growth. In this paper, we use a firm-level database for 62 developing countries to analyze which are the most important institutional obstacles driving misallocation. Our results highlight the importance of trade regulations, the functioning of courts, and access to finance as key determinants of misallocation within countries. Political instability, labor regulations, and access to infrastructure, appear as relevant obstacles explaining misallocation between countries.
    Citation
    León-Ledesma, Miguel. 2016. Potential Growth, Misallocation, and Institutional Obstacles: Firm-Level Evidence. © Asian Development Bank. http://hdl.handle.net/11540/8812.
    ISSN
    2313-6537 (Print)
    2313-6545 (e-ISSN)
    Keywords
    Development
    Trade
    Development Goals
    Skills Development
    Sustainable Development
    Trade Flows
    Trade And Development
    Food Security And Trade
    Trade Volume
    Trade Potential
    Trade Flows
    External Trade
    Industrial policy
    New technology
    Innovations
    Industry
    Export policy
    Import policy
    Trade Unions
    Development assistance
    ADB
    Curriculum development
    Development assistance
    Development aid
    Development indicators
    Development potential
    Development models
    Project appraisal
    Performance appraisal
    Regional development bank
    Trade development
    Import volume
    Export volume
    Capital
    Business
    Communication in rural development
    Social participation
    Occupational training
    Partnership
    Joint venture
    System analysis
    Labor and globalization
    Labor policy
    Regional trading blocs
    Foreign trade and employment
    Developing countries
    Industrial priorities
    Technological innovation
    Technology transfer
    Foreign trade regulation
    Industrial relations
    Trade-unions
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    Citable URI
    http://hdl.handle.net/11540/8812
    Metadata
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    Thumbnail
    ewp-480.pdf (999.1Kb)
    Author
    León-Ledesma, Miguel
    Theme
    Development
    Trade
     
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise