This paper shows that product prices determine organisational design by studying how trade policy affects vertical integration. The authors construct firm-level indices of vertical integration for a large set of countries and industries and exploit cross-section and time-series variation in import tariffs to examine the impact of prices on organisational choices.
Klaus Deininger, Aparajita Goyal, Hari Nagarajan03 December 2010
Women in many countries face legal barriers preventing them from inheriting property. This column argues that this is a starting place for broader gender inequality and that stronger inheritance rights for women are likely to be an effective mechanism for improving their access to physical and human capital.
Policymakers should aim to improve women’s position relative to men’s – not only is it fairer, but it is also more efficient, according to those in favour such initiatives (see for example Duflo 2003).
This column explores the security of property rights and the various channels through which they affect economic activity. It demonstrates a strong correlation between secure property rights and economic development and discusses the institutional challenges involved. Property rights reform is no panacea, and it faces difficult political economy hurdles in some countries.
Whether they thought private property was a sine qua non of a free society or organised theft, classical economists, from Adam Smith (1776) to Karl Marx (1891), accorded a central position to the role of property rights or the “relations of production” in the process of economic development. However, it is only recently that mainstream modern economics has come around to this point of view. The cheerful view of economists about the efficiency of competitive markets assumes that property rights are well-defined and well-enforced.
In recent years we have witnessed a phenomenon that has not been observed since the 1970s: the forced nationalization of major, foreign-owned oil assets in Venezuela, Bolivia, Russia and Kazakhstan. The authors of CEPR DP6755 study nationalizations in the oil industry around the world in 1960-2002 and show that governments are more likely to nationalize when oil prices are high and when political institutions are weak.
In recent years we have witnessed a phenomenon that has not been observed since the 1970s: the forced nationalization of major, foreign-owned oil assets in Venezuela, Bolivia, Russia and Kazakhstan. Due to economies of scale and better human capital, multinational oil companies have been more efficient and expropriations often give rise to losses of output and national income. In Mexico in 1938 and in Iran in 1951 expropriations not only resulted in a decline on the growth rates, but were also followed by a decline in output and wages in the industry.
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