Endogenous institution formation under a catching-up strategy in developing countries
By: Justin Yifu Lin, Zhiyun Li.
Contributors: Li, Zhiyun.; World Bank.
Series: Policy research working paper -- 4794; Policy research working papers (Online) -- 4794.
Publisher: World Bank
Published: 2008
Place of publication: [Washington, D.C
Language: eng
Format: Electronic resource
Subjects: Institution building -- Developing countries
Description: "This paper explores endogenous institution formation under a catching-up strategy in developing countries.  Since the catching-up strategy is normally against the compartive advantages of the developing countries, it can not be implemented through laissez-faire market mechanisms, and a government needs to establish nonmarket institutions to implement the strategy.  In a simple two-sector model, the authors show that an institutional complex of price distortion, output control, and a directive allocation system is sufficient to implement the best allocation for the catching-up strategy.  Furthermore, removing any of the three components will make it no longer implementable.  The analysis also compares the best allocation and prices under the catching-up strategy with their counterparts under no distortions.  The results of this paper provide important implications for understanding the institution formation in the developing countries that were pursuing a catching-up strategy after World War II. "--World Bank web site.
Notes: Title from PDF file as viewed on 5/8/2009.

Includes bibliographical references.

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