The Aggregate Impact of Micro Distortions: Complementarities Matter
We explore how developmental and regulatory impediments to resource reallocation limit the ability of developing countries to adopt technologies: an efficient economy quickly innovates; but when the economy is unable to fully use resources liberated by closing firms, or when policy distortions deter firm dynamics, then technological adoption becomes sluggish, and growth is reduced. Our theory accounts for 75% of the income (GNI) gap between Latin America and the U.S. Half of this simulated gap is explained by the barriers individually, the other half by their complementarity. Thus, the benefits from market reforms are largely diminished if distortions, developmental as well as regulatory, are not uniformly eliminated.
|Date of creation:||2010|
|Date of revision:||Feb 2009|
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- Raphael Bergoeing; Loayza & Norman; Repetto, 2004.
Econometric Society 2004 Latin American Meetings
36, Econometric Society.
- Raphael Bergoeing & Norman Loayzaw & Andrea Repetto, 2004. "Slow Recoveries," NBER Working Papers 10584, National Bureau of Economic Research, Inc.
- Raphael Bergoeing & Norman Loayza, 2004. "Slow Recoveries," 2004 Meeting Papers 244, Society for Economic Dynamics.
- Raphael Bergoeing & Norman Loayza & Andrea Repetto, 2004. "Slow Recoveries," Documentos de Trabajo 188, Centro de Economía Aplicada, Universidad de Chile.
- Douglas Gollin, 2001.
"Getting Income Shares Right,"
Department of Economics Working Papers
2001-11, Department of Economics, Williams College.
- Samaniego, Roberto M., 2006. "Industrial subsidies and technology adoption in general equilibrium," Journal of Economic Dynamics and Control, Elsevier, vol. 30(9-10), pages 1589-1614.
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