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Resource misallocation and aggregate productivity

Lashitew, A., 2014, Groningen: University of Groningen, SOM research school. 245 p.

Research output: ThesisThesis fully internal (DIV)Academic

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  • Addisu Lashitew
Cross-country income differences are to a great extent driven by productivity. This thesis looks into the potential contribution of resource misallocation in explaining these large gaps in aggregate productivity. Analysis is conducted by applying recent methodological advances on two unique datasets for the formal manufacturing sector. The results show that misallocation of labor and capital among heterogeneous plants can depress aggregate productivity substantially, although this does not appear to be particularly higher in poorer countries. The thesis takes a closer look into a number of institutional factors that induce misallocation, focusing on employment protection, financial development, and political connections. Stringent employment protection and low level of financial development are associated with greater misallocation. Potentially distorting political connections increase firms’ financial access, although their role is lower in countries where financial markets are well developed. The results of this thesis indicate that loosening institutional bottlenecks can induce more efficient resource allocation, contributing to productivity growth.
Original languageEnglish
QualificationDoctor of Philosophy
Awarding Institution
Supervisors/Advisors
Award date20-Nov-2014
Place of PublicationGroningen
Publisher
Print ISBNs978-90-367-7440-6
Electronic ISBNs978-90-367-7439-0
Publication statusPublished - 2014

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