Showing papers by "Rafael La Porta published in 2011"
TL;DR: In this paper, the authors examine the productivity of informal firms (those that are not registered with the government) in 24 African countries using field work and World Bank firm level data, and find that productivity jumps sharply if they compare small formal firms to informal firms, and rises rapidly with the size of formal firms.
Abstract: We examine the productivity of informal firms (those that are not registered with the government) in 24 African countries using field work and World Bank firm level data. We find that productivity jumps sharply if we compare small formal firms to informal firms, and rises rapidly with the size of formal firms. Critically, informal firms appear to be qualitatively different than formal firms: they are smaller in size, produce to order, are run by managers with low human capital, do not have access to external finance, do not advertise their products, and sell to largely informal clients for cash. Informal firms thus occupy a very different market niche than formal firms do, and rarely become formal because there is very little demand for their products from the formal sector.
49 citations
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TL;DR: In this paper, the authors investigate the determinants of regional development using a newly constructed database of 1569 sub-national regions from 110 countries covering 74 percent of the world's surface and 96 percent of its GDP.
Abstract: We investigate the determinants of regional development using a newly constructed database of 1569 sub-national regions from 110 countries covering 74 percent of the world's surface and 96 percent of its GDP. We combine the cross-regional analysis of geographic, institutional, cultural, and human capital determinants of regional development with an examination of productivity in several thousand establishments located in these regions. To organize the discussion, we present a new model of regional development that introduces into a standard migration framework elements of both the Lucas (1978) model of the allocation of talent between entrepreneurship and work, and the Lucas (1988) model of human capital externalities. The evidence points to the paramount importance of human capital in accounting for regional differences in development, but also suggests from model estimation and calibration that entrepreneurial inputs and human capital externalities are essential for understanding the data.
36 citations
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TL;DR: In this article, the authors examine the productivity of informal firms (those that are not registered with the government) in 24 African countries using field work and World Bank firm level data, and find that productivity jumps sharply if they compare small formal firms to informal firms, and rises rapidly with the size of formal firms.
Abstract: We examine the productivity of informal firms (those that are not registered with the government) in 24 African countries using field work and World Bank firm level data. We find that productivity jumps sharply if we compare small formal firms to informal firms, and rises rapidly with the size of formal firms. Critically, informal firms appear to be qualitatively different than formal firms: they are smaller in size, produce to order, are run by managers with low human capital, do not have access to external finance, do not advertise their products, and sell to largely informal clients for cash. Informal firms thus occupy a very different market niche than formal firms do, and rarely become formal because there is very little demand for their products from the formal sector.
23 citations
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TL;DR: In this article, the authors argue that this line of argument is crucially limited both theoretically and epistemologically in that it almost completely excludes all power considerations from its ceteris paribus conditions.
Abstract: One of the strands in the literature on financial development in economics/economic history argues that legal codes, often imposed by imperial powers on their respective colonies, have important implications for the development of financial institutions, and through these institutions, on eventual economic growth. Particularly, it is argued that Anglo-American common law traditions accord better protection to creditors, require higher information disclosure, and as a result contribute directly to the growth of this sector. Therefore countries where common law traditions were imposed are financially more developed ceteris paribus (when measured by various criteria for financial efficiency) than those with non-common law traditions. This paper will maintain that this line of argument is crucially limited both theoretically and epistemologically in that it almost completely excludes all power considerations from its ceteris paribus conditions. Theoretically, it cannot explain conformity to legal norms independent of distributional consequences for actors adhering to the same, and epistemologically it cannot successfully separate the effect of norms from power relationships that could be argued to sustain them. Building, and improving, on the literature on ‘political’ explanations for the emergence of financial markets, this paper will demonstrate the conditions under which certain — though not all — kinds of ‘colonial’ relationships tend to retard financial development notwithstanding putatively ‘efficient’ legal codes.