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Does competition improve productivity in developing countries?

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  • Khalid Sekkat

Abstract

Using the manufacturing sector data at the three‐digit level, the paper examines whether the degree of competition improves productivity in developing countries. The degree of competition is measured through markups while productivity is measured through total factor productivity (TFP) and labor productivity. All are computed by industries. Taking account of endogeneity issues and of the role of relevant control variables, the results show that in Jordan and Morocco, markup has a significant and negative impact on productivity growth. In Egypt, while markup does not seem to affect productivity growth, a decrease in the share of state‐owned enterprises (SOEs) in a given industry has a significant and positive impact on productivity growth. In general, the existence of State‐Owned Enterprises is an obstacle to competition. We conclude that the greater the degree of competition, the higher the productivity in the three countries.

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  • Khalid Sekkat, 2009. "Does competition improve productivity in developing countries?," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 12(2), pages 145-162.
    • Handle: RePEc:taf:jecprf:v:12:y:2009:i:2:p:145-162
    DOI: 10.1080/17487870902872946
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    1. Kee, Hiau Looi & Hoekman, Bernard, 2007. "Imports, entry and competition law as market disciplines," European Economic Review, Elsevier, vol. 51(4), pages 831-858, May.
    2. Abdelhak Senhadji, 2000. "Sources of Economic Growth: An Extensive Growth Accounting Exercise," IMF Staff Papers, Palgrave Macmillan, vol. 47(1), pages 1-6.
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    1. Anna M. Ferragina & Fernanda Mazzotta & Khalid Sekkat, 2016. "Financial constraints and productivity growth across the size spectrum: microeconomic evidence from Morocco," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 6(3), pages 361-381, December.
    2. Mariotti, Sergio & Marzano, Riccardo, 2021. "The effects of competition policy, regulatory quality and trust on inward FDI in host countries," International Business Review, Elsevier, vol. 30(6).
    3. Wim Naudé, 2011. "Foreign Aid for Innovation: The Missing Ingredient in Private Sector Development?," Working Papers 2011/35, Maastricht School of Management.
    4. Abeer Elshennawy & Mohammed Bouaddi, 2021. "Sources of firm-level heterogeneity in labour productivity in Egypt’s manufacturing sector," Empirical Economics, Springer, vol. 60(5), pages 2589-2612, May.
    5. Jiancui LIU & Shilin ZHENG, 2018. "The Origins of Productivity Change and Economic Growth in China’s Cities between the Years 2001 and 2014," Chinese Journal of Urban and Environmental Studies (CJUES), World Scientific Publishing Co. Pte. Ltd., vol. 6(02), pages 1-27, June.
    6. Kim, Incheol & Lee, Suin & Sharma, Bina, 2023. "Competition law reform and firm performance: Evidence from developing countries," Emerging Markets Review, Elsevier, vol. 56(C).
    7. Jala Youssef & Chahir Zaki, 2019. "Between Stabilization and Allocation in the MENA Region: Are Competition Laws Helping?," Working Papers 1319, Economic Research Forum, revised 21 Aug 2019.

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