Record Details

Inefficient Growth

Review of Economics and Institutions

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Field Value
 
Title Inefficient Growth
 
Creator Spruk, Rok; University of Ljubljana, Faculty of Economics
Kovac, Mitja; Faculty of Economics, University of Ljubljana
 
Subject —
TFP, transaction costs, economic growth, cross-country productivity differences
C23, K20, K23, K40, O40, O43, O47
 
Description The notion that legal institutions matter for growth and development can hardly be disputed in a world of non-zero transaction costs. This research advances the hypothesis that transaction costs explain large and wide-standing cross-country productivity differences. We examine the contribution of transaction costs to total factor productivity for a large panel of countries. We show that transaction costs reflect the policy constraints, country-specific policies, distortions and barriers to entry that discourage the adoption of the efficient use of technology by protecting the vested interests in the existing production process. Our findings suggest that lower costs of contract enforcement, low-cost and efficient insolvency framework and accessible property rights contribute substantially to TFP growth over time while weaker effects are found for lighter business registration and licensing requirements. Our results are stable across a variety of estimation techniques. By exploiting the variation in pre-industrial urbanization rate, disease environment, and latent cultural traits, we show that the negative effect of rising transaction costs on TFP appears to be causal. 
 
Publisher University of Perugia
 
Contributor —
 
Date 2018-12-10
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://www.rei.unipg.it/rei/article/view/268
10.5202/rei.v9i2.268
 
Source Review of Economics and Institutions; Vol 9, No 2 (2018); 59
2038-1379
2038-1344
 
Language eng
 
Relation http://www.rei.unipg.it/rei/article/view/268/187