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Trade Liberalization, Democratization and Technology Adoption

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  • Cervellati, Matteo

    ()
    (University of Bologna)

  • Naghavi, Alireza

    ()
    (University of Bologna)

  • Toubal, Farid

    ()
    (ENS de Cachan)

Abstract

We study the role of trade liberalization, democratization and their interaction for technology adoption. A general equilibrium theory with heterogeneous skills predicts a complementarity between trade and political regimes. Openness should accelerate technology adoption if coupled with democratization but may lead to a slow down if these regime changes are imbalanced. We use panel data on technology adoption at the sectoral level for the period 1980-2000 by exploiting within country variation and the heterogenous timing of openness and democratization. The results document the existence of robust positive interactions between these institutional changes for technology adoption and productivity growth.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7132.

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Length: 52 pages
Date of creation: Jan 2013
Date of revision:
Handle: RePEc:iza:izadps:dp7132

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Related research

Keywords: trade openness; democratization; political economy theory; technology adoption; sector level panel data; cross-country analysis;

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  1. Edwards, Sebastian, 1998. "Openness, Productivity and Growth: What Do We Really Know?," Economic Journal, Royal Economic Society, vol. 108(447), pages 383-98, March.
  2. Comin, D. & Hobijn, B., 2003. "Cross-Country Technology Adoption: Making the Theories Face the Facts," Working Papers 03-04, C.V. Starr Center for Applied Economics, New York University.
  3. Giavazzi, Francesco & Tabellini, Guido, 2004. "Economic and Political Liberalizations," CEPR Discussion Papers 4579, C.E.P.R. Discussion Papers.
  4. Tavares, Jose, 2003. "Trade, Factor Proportions and Political Rights," FEUNL Working Paper Series wp437, Universidade Nova de Lisboa, Faculdade de Economia.
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  6. Aidt, T.S. & Gassebner, M., 2007. "Do Autocratic States Trade Less?," Cambridge Working Papers in Economics 0742, Faculty of Economics, University of Cambridge.
  7. Attanasio, Orazio & Goldberg, Pinelopi & Pavcnik, Nina, 2003. "Trade Reforms and Wage Inequality in Colombia," CEPR Discussion Papers 4023, C.E.P.R. Discussion Papers.
  8. Wacziarg, Romain & Welch, Karen Horn, 2003. "Trade Liberalization and Growth: New Evidence," Research Papers 1826, Stanford University, Graduate School of Business.
  9. Josef Falkinger & Volker Grossmann, 2004. "Institutions and Development: The Interaction between Trade Regime and Political System," CESifo Working Paper Series 1279, CESifo Group Munich.
  10. Do, Quy-Toan & Levchenko, Andrei A., 2009. "Trade, inequality, and the political economy of institutions," Journal of Economic Theory, Elsevier, vol. 144(4), pages 1489-1520, July.
  11. Adrian Wood, 1995. "How Trade Hurt Unskilled Workers," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 57-80, Summer.
  12. Barro, Robert J, 1996. " Democracy and Growth," Journal of Economic Growth, Springer, vol. 1(1), pages 1-27, March.
  13. Ruben Segura-Cayuela, 2006. "Inefficient Policies, Inefficient Institutions and Trade," 2006 Meeting Papers 502, Society for Economic Dynamics.
  14. Greenaway, David & Morgan, Wyn & Wright, Peter, 2002. "Trade liberalisation and growth in developing countries," Journal of Development Economics, Elsevier, vol. 67(1), pages 229-244, February.
  15. Christodoulos Stefanadis, 2010. "Appropriation, Property Rights Institutions, and International Trade," American Economic Journal: Economic Policy, American Economic Association, vol. 2(4), pages 148-72, November.
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