Institutions and the Sectoral Organization of Production
The impact of economic institutions on development is presently taken for granted but there is surprisingly scarce evidence on the channels through which institutions affect the organization of output. Imperfections in contractual enforcement, for example, could lead firms to adopt technologies that inefficiently minimize dependence on other sectors, thus going hand in hand with a reduction in productivity. Another channel would be the concentration of economic activity in sectors that have fewer interactions with other sectors. Using a dataset on manufacturing, this paper presents empirical evidence supporting both effects: better contractual enforcement raises relatively more the labor share of sectors that interact more with other sectors; further, good governance also boosts relatively more labor productivity in more complex subsectors of manufacturing. Both effects are strongest among countries whose labor productivity ranks in the second and third quartiles of the world productivity distribution and they are mute for the two extreme groups of poor and developed economies.
|Date of creation:||Dec 2012|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: 0041 31 631 45 06
Fax: 41 31 631 37 83
Web page: http://www.vwi.unibe.ch/content/publikationen/index_eng.html
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Knack, Stephen & Keefer, Philip, 1995. "Institutions and Economic Performance: Cross-Country Tests Using Alternative Institutional Indicators," MPRA Paper 23118, University Library of Munich, Germany.
- Robert E. Hall & Charles I. Jones, 1999.
"Why Do Some Countries Produce So Much More Output Per Worker Than Others?,"
The Quarterly Journal of Economics,
MIT Press, vol. 114(1), pages 83-116, February.
- Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output per Worker than Others?," NBER Working Papers 6564, National Bureau of Economic Research, Inc.
- Berthold Herrendorf & Ákos Valentinyi, 2012. "Which Sectors Make Poor Countries So Unproductive?," Journal of the European Economic Association, European Economic Association, vol. 10(2), pages 323-341, 04.
- Kevin Cowan & Alejandro Neut, 2007. "Intermediate Goods, Institutions and Output per Worker," Working Papers Central Bank of Chile 420, Central Bank of Chile.
- Costinot, Arnaud, 2007.
"On the Origins of Comparative Advantage,"
University of California at San Diego, Economics Working Paper Series
qt07g7g8h8, Department of Economics, UC San Diego.
- Stephen Knack & Philip Keefer, 1995. "Institutions And Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economics and Politics, Wiley Blackwell, vol. 7(3), pages 207-227, November.
- Andrei A. Levchenko, 2004.
"Institutional Quality and International Trade,"
IMF Working Papers
04/231, International Monetary Fund.
When requesting a correction, please mention this item's handle: RePEc:ube:dpvwib:dp1207. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Silvia Glusstein-Gerber)
If references are entirely missing, you can add them using this form.