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The Economic Foundations of Institutional Stagnation in Commodity-Exporting Countries

Author

Listed:
  • Francis Andrianarison
  • Victor A.B. Davies
  • Sylvain Dessy

Abstract

Many poor countries are plagued with growth-impeding institutions. We develop a three-sector general equilibrium model linking economic stagnation in these countries to poor export terms of trade. We examine the extent to which changes in the terms of trade affect private agents’ incentive to coalesce to oppose the adoption of growth-promoting institutions. We show that under certain conditions, below a threshold terms of trade level, private agents gain from coalescing to oppose the adoption of growth-promoting institutions. Above this threshold, gains from coalescing disappear, fostering institutional change.

Suggested Citation

  • Francis Andrianarison & Victor A.B. Davies & Sylvain Dessy, 2010. "The Economic Foundations of Institutional Stagnation in Commodity-Exporting Countries," Cahiers de recherche 1036, CIRPEE.
    • Handle: RePEc:lvl:lacicr:1036
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    File URL: http://www.cirpee.org/fileadmin/documents/Cahiers_2010/CIRPEE10-36.pdf
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    More about this item

    Keywords

    Terms of trade; primary commodities; institutions; general equilibrium;
    All these keywords.

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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