Development through synergistic reforms

James Rauch

Journal of Development Economics, 2010, vol. 93, issue 2, 153-161

Abstract: For many less developed countries production of high quality output is a precondition for firms to become exporters. Institutional deficiencies that raise costs of high quality production therefore limit the positive impact that trade facilitation can have on income. Consequently, institutional reforms that reduce costs of high quality production and trade reform have synergistic effects. In contrast, institutional reforms that reduce costs of low quality production (e.g., reforms that disproportionately benefit small businesses) interfere with the impact of trade reform. We obtain these results in a heterogeneous firm model that displays standard "industry rationalization" responses to reduced trade costs.

Keywords: Development; Heterogeneous; firms; Institutional; reform; Synergy (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (6)

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Working Paper: Development Through Synergistic Reform (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:93:y:2010:i:2:p:153-161

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