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Corporate governance and industrialization

Author

Listed:
  • Maurizio Iacopetta

    (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique - UniCA - Université Côte d'Azur)

  • Pietro Peretto

Abstract

Corporate governance distortions delay or even halt a country’s transformation into a modern innovation economy. We investigate the mechanism through a growth model that allows for agency issues within firms. Governance distortions raise the cost of investment and depress the incentives to set up new firms. Modest differences in governance account for large gaps in income: A 32 percent investment cost differential can explain the secular decline of Latin America income relative to that of the USA, and implies an industrialization delay of a third of a century. We obtain similar results for a large number of countries and macro-regions.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Maurizio Iacopetta & Pietro Peretto, 2021. "Corporate governance and industrialization," Post-Print halshs-03586025, HAL.
    • Handle: RePEc:hal:journl:halshs-03586025
    DOI: 10.1016/j.euroecorev.2021.103718
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    Cited by:

    1. Chu, Angus C. & Furukawa, Yuichi & Wang, Xilin, 2022. "Rent-seeking government and endogenous takeoff in a Schumpeterian economy," Journal of Macroeconomics, Elsevier, vol. 72(C).
    2. Chu, Angus C. & Peretto, Pietro & Xu, Rongxin, 2023. "Export-led takeoff in a Schumpeterian economy," Journal of International Economics, Elsevier, vol. 145(C).
    3. Chu, Angus C. & Cozzi, Guido & Fan, Haichao & Hu, Dongmin, 2025. "Natural selection and innovation-driven growth," Macroeconomic Dynamics, Cambridge University Press, vol. 29, pages 1-1, January.
    4. Murat Alp Celik & Xu Tian, 2023. "Agency Frictions, Managerial Compensation, and Disruptive Innovations," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 51, pages 16-38, December.
    5. Iacopetta, Maurizio & Peretto, Pietro F., 2024. "Business taxes, management delegation, and growth," European Economic Review, Elsevier, vol. 170(C).
    6. Chu, Angus C. & Fan, Haichao & Wang, Xilin, 2020. "Status-seeking culture and development of capitalism," Journal of Economic Behavior & Organization, Elsevier, vol. 180(C), pages 275-290.
    7. Mei‐ying Hu & Ping‐ho Chen & Hsun Chu & Ching‐chong Lai, 2023. "Growth and optimal policies in an R&D‐growth model with imperfect international capital mobility," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 25(4), pages 840-866, August.
    8. Prettner, Klaus & Stojanovikj, Martin, 2025. "Extractive Institutions and the Takeoff to Long-Run Growth: A Schumpeterian Perspective," Department of Economics Working Paper Series 387, WU Vienna University of Economics and Business.
    9. Chu, Angus C. & Furukawa, Yuichi & Peretto, Pietro & Xu, Rongxin, 2024. "Agricultural trade and industrial development," MPRA Paper 122630, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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