Good and bad institutions: is the debate over? Cross-country firm-level evidence from the textile industry

Sumon Kumar Bhaumik*, Ralitza Dimova

*Corresponding author for this work

Research output: Contribution to journalArticle

Abstract

Using firm-level data from nine developing countries, we demonstrate that certain institutions, like restrictive labour market regulations, that are considered bad for economic growth might be beneficial for production efficiency, whereas good business environment, which is considered beneficial for economic growth, might have an adverse impact on production efficiency. We argue that our results suggest that there might be significant difference in the macro- and micro-impacts of institutional quality, such that the classification of institutions into 'good' and 'bad might be premature.

Original languageEnglish
Pages (from-to)109-126
Number of pages18
JournalCambridge Journal of Economics
Volume38
Issue number1
Early online date24 May 2013
DOIs
Publication statusPublished - 2014

Bibliographical note

This is a pre-copyedited, author-produced PDF of an article accepted for publication in Cambridge journal of economics] following peer review. The version of record Bhaumik, S. K., & Dimova, R. (2014). Good and bad institutions – is the debate over? Cross-country firm-level evidence from the textile industry. Cambridge journal of economics, 38(1), 109-126 is available online at: http://cje.oxfordjournals.org/content/38/1/109

Keywords

  • institutional quality
  • production efficiency
  • stochastic frontier model

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