Extractive institutions in non-tradeable industries

Vanino, Enrico ORCID: 0000-0002-4740-1501 and Lee, Stevan (2018) Extractive institutions in non-tradeable industries. Economics Letters. ISSN 0165-1765

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Abstract

We are interested in the hypothesis that in order to promote export competitiveness and create jobs, it is necessary to address major distortions to prices in the non-tradeable sector. Exports drive growth in developing countries, yet most employment growth is generated in non-tradeable sectors. We contribute to the previous literature by explaining how non-tradeable sectors are particularly vulnerable to distortions arising from extractive and poor quality institutions. We estimate an IV-GMM model on a sample of low-middle income countries, finding evidence of a strong relationship between the growth of non-tradeable prices and the quality of local institutions. Overlooking the distortions in non-tradeable sectors could limit the analysis of constraints to economic growth and transformation in developing countries.

Item Type:	Article
Official URL:	https://www.sciencedirect.com/journal/economics-le...
Additional Information:	© 2018 Elsevier B.V.
Divisions:	Geography & Environment
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HF Commerce
JEL classification:	D - Microeconomics > D2 - Production and Organizations D - Microeconomics > D4 - Market Structure and Pricing H - Public Economics > H1 - Structure and Scope of Government L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance L - Industrial Organization > L5 - Regulation and Industrial Policy L - Industrial Organization > L8 - Industry Studies: Services O - Economic Development, Technological Change, and Growth > O1 - Economic Development
Date Deposited:	29 May 2018 13:13
Last Modified:	13 Sep 2024 13:16
URI:	http://eprints.lse.ac.uk/id/eprint/88101

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