Institutional Barrier and the World Income Distribution

Celso Costa Junior

MPRA Paper from University Library of Munich, Germany

Abstract: The objective of this paper is to discuss the relationship of the openness and the impact of institutional reforms in the participation of the product of individual countries in global output. Therefore, it is based on economic simulations, a type of alternative approach that uses mathematical techniques and deductions to solve an objective model. The economic simulation of this work reflects that the trade opening level is an important factor of weight for possible institutional alterations in the economies. It is noticeable that, in the countries with low opening level, the cost of the capital is the main setback for the economic growth. And, in those economies with high opening level, the largest dynamics would compensate the problems caused by the cost of the capital. When compared the two types of reforms (continuous versus punctual), the "continuous" reform will bring a more expressive gain quality of the relative product than the "punctual" reform.

Keywords: Economic growth; economic simulation and institutional reforms (search for similar items in EconPapers)
JEL-codes: C61 O43 (search for similar items in EconPapers)
Date: 2012
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