Setting Standards: Information Accumulation in Development

Daron Acemoglu and Fabrizio Zilibotti

Working papers from Massachusetts Institute of Technology (MIT), Department of Economics

Abstract: We propose a model in which economic relations and institutions in advanced and less developed economies differ as these societies have access to different amounts of information. This lack of information makes it hard to give the right incentiv es to managers and entrepreneurs. We argue that differences in the amount of informaiton arise because of the differences in the scale of activities in rich and poor economies; namely, there is too little repetition of similar activities in poor economies , thus insufficient information to set the appropriate standards for firm performance. Our model predicts a number of institutional and structural transformations as the economy accumulates capital and information.

Keywords: INFORMATION; RISK; DEVELOPING COUNTRIES (search for similar items in EconPapers)
JEL-codes: D82 M13 O13 O14 O40 (search for similar items in EconPapers)
Pages: 42 pages
Date: 1997
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Working Paper: Setting Standards: Information Accumulation in Development (1997)
Working Paper: Setting standards: Information accumulation in development (1997)
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