Institutions and firms’ technological changes and productivity growth

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Abstract

We investigate long-run firm-level productive growth and technological changes and relate these to the formal and informal institutions and related factors. We conclude that persistency of easing of regulations through broader reforms, including privatization and perception of non-reversal of reforms, helped firms achieve prolonged productivity gains—led by technological changes alongside a socially desirable reduction in CO2 emissions due to energy saving, as well as increased labour usage, despite variations in the quality of formal and informal institutions. Broadly, both formal and informal institutions matter for all firms irrespective of productivity levels and technological gains. Government stability, the country's investment climate, socio-economic conditions, and corruption perception are essential in determining long-run productivity growth and technological changes. However, the role of law and order conditions, political constraints, and competitiveness of the political system/process in determining productivity gains and technological improvements varies by firms’ characteristics.

Original languageEnglish
Article number120993
Number of pages21
JournalTechnological Forecasting and Social Change
Volume171
Early online date5 Jul 2021
DOIs
Publication statusPublished - 1 Oct 2021

Keywords

  • Institutional quality
  • Productivity
  • Reforms
  • Socio-economic conditions
  • Technological progress

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