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Good and Bad Institutions: Is the Debate Over? Cross-Country Firm-Level Evidence from the Textile Industry

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  • Bhaumik, Sumon K.

    () (University of Sheffield)

  • Dimova, Ralitza

    () (University of Manchester)

Abstract

Using firm-level data from nine developing countries we demonstrate that (a) certain institutions like restrictive labour market regulations that are considered to be bad for economic growth might be beneficial for production efficiency, whereas (b) good business environment which is considered to be beneficial for economic growth might have an adverse impact on production efficiency. We argue that our results suggest that the debate about the implications of institutional quality is far from being over, and classification of institutions into "good" and "bad" might be premature.

Suggested Citation

  • Bhaumik, Sumon K. & Dimova, Ralitza, 2011. "Good and Bad Institutions: Is the Debate Over? Cross-Country Firm-Level Evidence from the Textile Industry," IZA Discussion Papers 5471, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp5471
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    References listed on IDEAS

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    Cited by:

    1. Bhaumik, Sumon K. & Dimova, Ralitza & Kumbhakar, Subal C. & Sun, Kai, 2014. "More Is Better! What Can Firm-Specific Estimates of the Impact of Institutional Quality on Performance Tell Us?," IZA Discussion Papers 7886, Institute for the Study of Labor (IZA).
    2. Brown, Drusilla & Dehejia, Rajeev & Robertson, Raymond, 2016. "Laws, Costs, Norms, and Learning: Improving Working Conditions in Developing Countries," IZA Discussion Papers 10025, Institute for the Study of Labor (IZA).
    3. Bhaumik, Sumon K. & Dimova, Ralitza, 2012. "Does Human Capital Endowment of FDI Recipient Countries Really Matter? Evidence from Cross-Country Firm Level Data," IZA Discussion Papers 6382, Institute for the Study of Labor (IZA).
    4. Fernanda Ricotta, 2016. "The Quality Of Regional Government And Firm Performance," Working Papers 201606, Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF.
    5. Fernanda Ricotta, 2016. "The Quality of Regional Government and Firm Performance," ERSA conference papers ersa16p357, European Regional Science Association.

    More about this item

    Keywords

    stochastic frontier model; institutional quality; production efficiency;

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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