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Extractive institutions in non-tradeable industries

Vanino, Enrico and Lee, Stevan (2018) Extractive institutions in non-tradeable industries. Economics Letters. ISSN 0165-1765

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Identification Number: 10.1016/j.econlet.2018.05.025

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
Sets: Departments > Geography and Environment
Date Deposited: 29 May 2018 13:13
Last Modified: 20 Jun 2019 00:11
URI: http://eprints.lse.ac.uk/id/eprint/88101

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