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Political Influence of Exporting and Import-Competing Firms: Evidence from Eastern European and Central Asian Countries

  • Yasar, Mahmut

Theoretical studies have emphasized the role firms play in shaping laws and regulations through political activities. This paper examines whether import-competing firms and exporting firms possess differing levels of political influence by using firm-level data from 27 Eastern European and Central Asian countries. To control for endogeneity, we estimate a multivariate probit model using a simulated maximum-likelihood algorithm. We find that exporting firms have stronger political influence than import-competing firms, indicating that more free trade policies are the likely outcome of political-rent seeking in these countries. The results have significant implications for countries’ economic growth and development.

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File URL: http://www.sciencedirect.com/science/article/pii/S0305750X1300140X
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Article provided by Elsevier in its journal World Development.

Volume (Year): 51 (2013)
Issue (Month): C ()
Pages: 154-168

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Handle: RePEc:eee:wdevel:v:51:y:2013:i:c:p:154-168
DOI: 10.1016/j.worlddev.2013.06.001
Contact details of provider: Web page: http://www.elsevier.com/locate/worlddev

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