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Development through synergistic reforms

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  • Rauch, James E.

Abstract

For many less developed countries production of high quality output is a precondition for firms to become exporters. Institutional deficiencies that raise costs of high quality production therefore limit the positive impact that trade facilitation can have on income. Consequently, institutional reforms that reduce costs of high quality production and trade reform have synergistic effects. In contrast, institutional reforms that reduce costs of low quality production (e.g., reforms that disproportionately benefit small businesses) interfere with the impact of trade reform. We obtain these results in a heterogeneous firm model that displays standard "industry rationalization" responses to reduced trade costs.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Development Economics.

Volume (Year): 93 (2010)
Issue (Month): 2 (November)
Pages: 153-161

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Handle: RePEc:eee:deveco:v:93:y:2010:i:2:p:153-161

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Web page: http://www.elsevier.com/locate/devec

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Keywords: Development Heterogeneous firms Institutional reform Synergy;

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Citations

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Cited by:
  1. Hallak, Juan Carlos & Sivadasan, Jagadeesh, 2011. "Firms' Exporting Behavior under Quality Constraints," Working Papers 628, Research Seminar in International Economics, University of Michigan.
  2. Brenton, Paul & Saborowski, Christian & von Uexkull, Erik, 2009. "What explains the low survival rate of developing country export flows ?," Policy Research Working Paper Series 4951, The World Bank.
  3. Hallak, Juan Carlos & Sivadasan, Jagadeesh, 2008. "Productivity, quality and exporting behavior under minimum quality constraints," MPRA Paper 24146, University Library of Munich, Germany.
  4. Richard Chisik, 2010. "Trade Disputes, Quality Choice, and Economic Integration," Working Papers 022, Ryerson University, Department of Economics.
  5. Dick Nuwamanya Kamuganga, 2012. "Does Intra-Africa Regional Trade Cooperation Enhance Africa’s Export Survival?," IHEID Working Papers 16-2012, Economics Section, The Graduate Institute of International Studies.
  6. James E. Rauch, 2013. "Employee Spinouts, Social Networks, and Family Firms," NBER Working Papers 19727, National Bureau of Economic Research, Inc.
  7. Ayyagari, Meghana & Demirguc-Kunt, Asli & Maksimovic, Vojislav, 2011. "Small vs. young firms across the world : contribution to employment, job creation, and growth," Policy Research Working Paper Series 5631, The World Bank.
  8. Meghana Ayyagari & Asli Demirguc-Kunt & Vojislav Maksimovic, 2014. "Who creates jobs in developing countries?," Small Business Economics, Springer, vol. 43(1), pages 75-99, June.

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