Openness and Institutional Changes
نویسندگان
چکیده
Opening up is often considered a commitment to breaking indigenous firms’ status quo and moving the institutional reforms forward. However, the institutional environment in many open countries has yet to show the sign of improvement. We suggest that one important reason for the various reactions to openness is firm heterogeneity. Economic policies have different effects on different firms, and economies comprised of different types of firms are not equally affected by openness. Specifically, economies dominated by a group of privileged firms are least likely to adopt strong market institutions. We illustrate this point with a simple general equilibrium model. Openness and Institutional Changes 1
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