Extractive institutions in non-tradeable industries

Enrico Vanino and Stevan Lee

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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.

Keywords: Non-tradeable; Institutional quality; Extractive institutions; Economic development (search for similar items in EconPapers)
JEL-codes: D2 D4 H1 L1 L5 L8 O1 (search for similar items in EconPapers)
Date: 2018-09-01
New Economics Papers: this item is included in nep-gro
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published in Economics Letters, 1, September, 2018. ISSN: 0165-1765

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Journal Article: Extractive institutions in non-tradeable industries (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:88101

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