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Predation, Protection and Productivity: A Firm-Level Perspective

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  • Timothy Besley
  • Hannes Mueller

Abstract

This paper studies the consequences of predation when firms deploy guard labor as a means of protecting themselves. We build a simple model and combine it with data for 142 countries from the World Bank enterprise surveys which ask about firm-level experiences with predation and spending on protection. We use the model to estimate the output loss caused by the misallocation of labor across firms and from production to protection. The loss due to protection effort is substantial and patterns of state protection at the micro level can have a profound impact on aggregate output losses. Various extensions are discussed.

Suggested Citation

  • Timothy Besley & Hannes Mueller, 2016. "Predation, Protection and Productivity: A Firm-Level Perspective," Working Papers 900, Barcelona Graduate School of Economics.
  • Handle: RePEc:bge:wpaper:900
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    References listed on IDEAS

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    Cited by:

    1. Besley, T. & Roland, I. & Van Reenen, J., 2019. "The Aggregate Consequences of Default Risk: Evidence from Firm-level Data," Cambridge Working Papers in Economics 2061, Faculty of Economics, University of Cambridge.
    2. Islam,Asif Mohammed & Muzi,Silvia, 2020. "Mobile Money and Investment by Women Businesses in Sub-Saharan Africa," Policy Research Working Paper Series 9338, The World Bank.
    3. Laurent WAGNER, 2020. "The allocation of resources of national development banks," Working Paper 9c3d4298-95e5-4561-a9cb-5, Agence française de développement.
    4. Ummad Mazhar & Fahd Rehman, 2019. "Diehard or delicate? Violence and young firm performance in a developing country," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 54(4), pages 236-247, October.
    5. Ummad Mazhar, 2021. "Women empowerment and insecurity: firm-level evidence," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 56(1), pages 43-53, January.
    6. Loris Rubini, 2019. "Bribes in the Business Cycles," Review of Economics and Institutions, Università di Perugia, vol. 10(1).
    7. Laurent Wagner, 2020. "The allocation of resources of national development banks: Does it fit development goals?," Working Papers hal-02988377, HAL.
    8. Ranasinghe, Ashantha, 2020. "Misallocation across Establishment Gender," Working Papers 2020-2, University of Alberta, Department of Economics.

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    More about this item

    Keywords

    predation; firm data; labour misallocation; security; aggregate output loss; Property rights; law enforcement; enterprise surveys; cost of crime;
    All these keywords.

    JEL classification:

    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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