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Trade Liberalization, Democratization and Technology Adoption

  • Cervellati, Matteo

    ()

    (University of Bologna)

  • Naghavi, Alireza

    ()

    (University of Bologna)

  • Toubal, Farid

    ()

    (ENS de Cachan)

We study the role of trade liberalization, democratization and their interaction for technology adoption. A general equilibrium theory with heterogeneous skills predicts a complementarity between trade and political regimes. Openness should accelerate technology adoption if coupled with democratization but may lead to a slow down if these regime changes are imbalanced. We use panel data on technology adoption at the sectoral level for the period 1980-2000 by exploiting within country variation and the heterogenous timing of openness and democratization. The results document the existence of robust positive interactions between these institutional changes for technology adoption and productivity growth.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7132.

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Length: 52 pages
Date of creation: Jan 2013
Date of revision:
Handle: RePEc:iza:izadps:dp7132
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  1. Falkinger, Josef & Grossmann, Volker, 2004. "Institutions and Development: The Interaction between Trade Regime and Political System," IZA Discussion Papers 1242, Institute for the Study of Labor (IZA).
  2. Sebastian Edwards, 1997. "Openness, Productivity and Growth: What Do We Really Know?," NBER Working Papers 5978, National Bureau of Economic Research, Inc.
  3. Diego Comin & Bart Hobijn, 2003. "Cross-country technology adoption: making the theories face the facts," Staff Reports 169, Federal Reserve Bank of New York.
  4. Giavazzi, Francesco & Tabellini, Guido, 2004. "Economic and Political Liberalizations," CEPR Discussion Papers 4579, C.E.P.R. Discussion Papers.
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  7. Barro, Robert J, 1996. " Democracy and Growth," Journal of Economic Growth, Springer, vol. 1(1), pages 1-27, March.
  8. Do, Quy-Toan & Levchenko, Andrei A., 2009. "Trade, inequality, and the political economy of institutions," Journal of Economic Theory, Elsevier, vol. 144(4), pages 1489-1520, July.
  9. Tavares, Jose, 2003. "Trade, Factor Proportions and Political Rights," FEUNL Working Paper Series wp437, Universidade Nova de Lisboa, Faculdade de Economia.
  10. Ruben Segura-Cayuela, 2006. "Inefficient Policies, Inefficient Institutions and Trade," 2006 Meeting Papers 502, Society for Economic Dynamics.
  11. Toke S. Aidt & Martin Gassebner, 2007. "Do Autocratic States Trade Less?," KOF Working papers 07-175, KOF Swiss Economic Institute, ETH Zurich.
  12. Romain Wacziarg & Karen Horn Welch, 2008. "Trade Liberalization and Growth: New Evidence," World Bank Economic Review, World Bank Group, vol. 22(2), pages 187-231, June.
  13. Greenaway, David & Morgan, Wyn & Wright, Peter, 2002. "Trade liberalisation and growth in developing countries," Journal of Development Economics, Elsevier, vol. 67(1), pages 229-244, February.
  14. Adrian Wood, 1995. "How Trade Hurt Unskilled Workers," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 57-80, Summer.
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