IDEAS home Printed from https://ideas.repec.org/p/ehl/lserod/88101.html
   My bibliography  Save this paper

Extractive institutions in non-tradeable industries

Author

Listed:
  • Vanino, Enrico
  • Lee, Stevan

Abstract

We are interested in the hypothesis that in order to promote export competitiveness and create jobs, it is necessary to address major distortions to prices in the non-tradeable sector. Exports drive growth in developing countries, yet most employment growth is generated in non-tradeable sectors. We contribute to the previous literature by explaining how non-tradeable sectors are particularly vulnerable to distortions arising from extractive and poor quality institutions. We estimate an IV-GMM model on a sample of low-middle income countries, finding evidence of a strong relationship between the growth of non-tradeable prices and the quality of local institutions. Overlooking the distortions in non-tradeable sectors could limit the analysis of constraints to economic growth and transformation in developing countries.

Suggested Citation

  • Vanino, Enrico & Lee, Stevan, 2018. "Extractive institutions in non-tradeable industries," LSE Research Online Documents on Economics 88101, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:88101
    as

    Download full text from publisher

    File URL: http://eprints.lse.ac.uk/88101/
    File Function: Open access version.
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Inessa Love & María Soledad Martínez Pería, 2015. "How Bank Competition Affects Firms' Access to Finance," The World Bank Economic Review, World Bank, vol. 29(3), pages 413-448.
    2. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2004. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," Journal of Economic Growth, Springer, vol. 9(2), pages 131-165, June.
    3. Álvarez, Inmaculada C. & Barbero, Javier & Rodríguez-Pose, Andrés & Zofío, José L., 2018. "Does Institutional Quality Matter for Trade? Institutional Conditions in a Sectoral Trade Framework," World Development, Elsevier, vol. 103(C), pages 72-87.
    4. Douglas Gollin & Remi Jedwab & Dietrich Vollrath, 2016. "Urbanization with and without industrialization," Journal of Economic Growth, Springer, vol. 21(1), pages 35-70, March.
    5. repec:bla:afrdev:v:29:y:2017:i:s1:p:27-41 is not listed on IDEAS
    6. Rijkers, Bob & Freund, Caroline & Nucifora, Antonio, 2017. "All in the family: State capture in Tunisia," Journal of Development Economics, Elsevier, vol. 124(C), pages 41-59.
    7. Andrew Williams & Abu Siddique, 2008. "The use (and abuse) of governance indicators in economics: a review," Economics of Governance, Springer, vol. 9(2), pages 131-175, May.
    8. Venables, Anthony J., 2017. "Breaking into tradables: Urban form and urban function in a developing city," Journal of Urban Economics, Elsevier, vol. 98(C), pages 88-97.
    9. Glaeser, Edward & Henderson, J. Vernon, 2017. "Urban economics for the developing World: An introduction," Journal of Urban Economics, Elsevier, vol. 98(C), pages 1-5.
    10. Rodrik, Dani, 2004. "Industrial Policy for the Twenty-First Century," CEPR Discussion Papers 4767, C.E.P.R. Discussion Papers.
    11. Daron Acemoglu, 2010. "Institutions, Factor Prices, and Taxation: Virtues of Strong States?," American Economic Review, American Economic Association, vol. 100(2), pages 115-119, May.
    12. Shandra, John M. & Nobles, Jenna & London, Bruce & Williamson, J.B.John B., 2004. "Dependency, democracy, and infant mortality: a quantitative, cross-national analysis of less developed countries," Social Science & Medicine, Elsevier, vol. 59(2), pages 321-333, July.
    13. Glenn Jenkins & Chun-Yan Kuo & Arnold C. Harberger, 2011. "Cost-Benefit Analysis for Investment Decisions: Chapter 10 (Economic Prices for Tradable Goods and Services)," Development Discussion Papers 2011-10, JDI Executive Programs.
    14. Eric Bartelsman & John Haltiwanger & Stefano Scarpetta, 2013. "Cross-Country Differences in Productivity: The Role of Allocation and Selection," American Economic Review, American Economic Association, vol. 103(1), pages 305-334, February.
    15. Glenn Jenkins & Chun-Yan Kuo & Arnold C. Harberger, 2011. "Cost-Benefit Analysis for Investment Decisions: Chapter 11 (Economic Prices for Non-Tradable Goods and Services)," Development Discussion Papers 2011-11, JDI Executive Programs.
    16. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
    17. Laura Langbein & Stephen Knack, 2010. "The Worldwide Governance Indicators: Six, One, or None?," Journal of Development Studies, Taylor & Francis Journals, vol. 46(2), pages 350-370.
    18. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ahmadisedigh, Hossein & Gosselin, Louis, 2022. "Combined heating and cooling networks with part-load efficiency curves: Optimization based on energy hub concept," Applied Energy, Elsevier, vol. 307(C).
    2. Ricardo E. Buitrago R. & María Inés Barbosa Camargo & Favio Cala Vitery, 2021. "Emerging Economies’ Institutional Quality and International Competitiveness: A PLS-SEM Approach," Mathematics, MDPI, vol. 9(9), pages 1-18, April.
    3. Kim, Sehoon & Connerton, Timothy Paul & Park, Cheongyeul, 2021. "Exploring the impact of technological disruptions in the automotive retail: A futures studies and systems thinking approach based on causal layered analysis and causal loop diagram," Technological Forecasting and Social Change, Elsevier, vol. 172(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cristina JUDE & Grégory LEVIEUGE, 2013. "Growth Effect of FDI in Developing Economies: the Role of Institutional Quality," LEO Working Papers / DR LEO 2251, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    2. Werner Hölzl, 2021. "Structural Change towards Services," WIFO Working Papers 631, WIFO.
    3. Siong Law & W. Azman-Saini, 2012. "Institutional quality, governance, and financial development," Economics of Governance, Springer, vol. 13(3), pages 217-236, September.
    4. Claudio Detotto & Sauveur Giannoni & Claire Goavec, 2017. "Does good governance attract tourists?," Working Papers 002, Laboratoire Lieux, Identités, eSpaces et Activités (LISA).
    5. Grundmann, Rainer & Gries, Thomas, 2015. "Crucial for Modern Sector Development? The Role of Exports and Institutions in Developing Countries," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112962, Verein für Socialpolitik / German Economic Association.
    6. Siddiqui, Danish Ahmed & Ahmed, Qazi Masood, 2013. "The effect of institutions on economic growth: A global analysis based on GMM dynamic panel estimation," Structural Change and Economic Dynamics, Elsevier, vol. 24(C), pages 18-33.
    7. Slesman, Ly & Baharumshah, Ahmad Zubaidi & Ra'ees, Wahabuddin, 2015. "Institutional infrastructure and economic growth in member countries of the Organization of Islamic Cooperation (OIC)," Economic Modelling, Elsevier, vol. 51(C), pages 214-226.
    8. Vieira, Flávio & MacDonald, Ronald & Damasceno, Aderbal, 2012. "The role of institutions in cross-section income and panel data growth models: A deeper investigation on the weakness and proliferation of instruments," Journal of Comparative Economics, Elsevier, vol. 40(1), pages 127-140.
    9. Eicher, Theo S. & Schreiber, Till, 2010. "Structural policies and growth: Time series evidence from a natural experiment," Journal of Development Economics, Elsevier, vol. 91(1), pages 169-179, January.
    10. Ahmet Faruk Aysan & …mer Faruk Baykal & Marie-Ange Véganzonès–Varoudakis, 2011. "The Effects of Convergence in Governance on Capital Accumulation in the Black Sea Economic Cooperation Countries," Chapters, in: Mehmet Ugur & David Sunderland (ed.), Does Economic Governance Matter?, chapter 6, Edward Elgar Publishing.
    11. Otto Brøns-Petersen & Søren Havn Gjedsted, 2021. "Climate change and institutional change: what is the relative importance for economic performance?," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 23(2), pages 333-360, April.
    12. Melissa Dell & Benjamin F. Jones & Benjamin A. Olken, 2014. "What Do We Learn from the Weather? The New Climate-Economy Literature," Journal of Economic Literature, American Economic Association, vol. 52(3), pages 740-798, September.
    13. Rok Spruk & Mitja Kovac, 2018. "Inefficient Growth," Review of Economics and Institutions, Università di Perugia, vol. 9(2).
    14. Andrés Rodríguez-Pose & Roberto Ganau, 2022. "Institutions and the productivity challenge for European regions," Journal of Economic Geography, Oxford University Press, vol. 22(1), pages 1-25.
    15. Andrea Lasagni & Annamaria Nifo & Gaetano Vecchione, 2015. "Firm Productivity And Institutional Quality: Evidence From Italian Industry," Journal of Regional Science, Wiley Blackwell, vol. 55(5), pages 774-800, November.
    16. Kilby, Christopher, 2005. "World Bank lending and regulation," Economic Systems, Elsevier, vol. 29(4), pages 384-407, December.
    17. Andrés Rodríguez‐Pose & Roberto Ganau & Kristina Maslauskaite & Monica Brezzi, 2021. "Credit constraints, labor productivity, and the role of regional institutions: Evidence from manufacturing firms in Europe," Journal of Regional Science, Wiley Blackwell, vol. 61(2), pages 299-328, March.
    18. Arminen, Heli & Menegaki, Angeliki N., 2019. "Corruption, climate and the energy-environment-growth nexus," Energy Economics, Elsevier, vol. 80(C), pages 621-634.
    19. Eslamloueyan, Karim & Jafari, Mahboubeh, 2019. "Do better institutions offset the adverse effect of a financial crisis on investment? Evidence from East Asia," Economic Modelling, Elsevier, vol. 79(C), pages 154-172.
    20. Harms, Philipp & an de Meulen, Philipp, 2013. "Demographic structure and the security of property rights: The role of development and democracy," European Journal of Political Economy, Elsevier, vol. 29(C), pages 73-89.

    More about this item

    Keywords

    Non-tradeable; Institutional quality; Extractive institutions; Economic development;
    All these keywords.

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • H1 - Public Economics - - Structure and Scope of Government
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L8 - Industrial Organization - - Industry Studies: Services
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ehl:lserod:88101. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: LSERO Manager (email available below). General contact details of provider: https://edirc.repec.org/data/lsepsuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.