Endogenous Institution Formation under a Catching-up Strategy in Developing Countries

Lin, Justin Yifu ; Li, Zhiyun

Washington, DC:World Bank

关键词: ACCUMULATION OF CAPITAL;    AGRICULTURE;    ALLOCATION OF CAPITAL;    BENCHMARK;    BUDGET CONSTRAINT;   

DOI  :  10.1596/1813-9450-4794
RP-ID  :  WPS4794

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

This paper explores endogenousinstitution formation under a catching-up strategy indeveloping countries. Since the catching-up strategy isnormally against the compartive advantages of the developingcountries, it can not be implemented through laissez-fairemarket mechanisms, and a government needs to establishnonmarket institutions to implement the strategy. In asimple two-sector model, the authors show that aninstitutional complex of price distortion, output control,and a directive allocation system is sufficient to implementthe best allocation for the catching-up strategy.Furthermore, removing any of the three components will makeit no longer implementable. The analysis also compares thebest allocation and prices under the catching-up strategywith their counterparts under no distortions. The results ofthis paper provide important implications for understandingthe institution formation in the developing countries thatwere pursuing a catching-up strategy after World War II.