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Industry level analysis : the way to identify the binding constraints to economic growth

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  • Palmade, Vincent

Abstract

There are many economic diagnostic tools available which are trying to identify the constraints to economic growth in a given country. Unfortunately these tools tend to provide inconclusive and often conflicting answers as to what the most important constraints are. Even more worrisome, they tend to overlook the many industry-specific policy and enforcement issues which, collectively, have been found to be the most important constraints to economic growth. This is the key finding from more than 10 years of economic research by the McKinsey Global Institute (MGI). The MGI Country studies have been uniquely based on the in-depth analysis of a representative sample of industries where clear causality links could be established between factors in the firms'external environment and their behavior, in particular through the analysis of competitive dynamics. They showed in detail how industry-specific policy and enforcement issues were the main constraints to private investment and fair competition-the two drivers of productivity and thus economic growth. This finding implies that governments and international financial institutions should rely on in-depth industry level analysis to uncover product market competition issues and set reform priorities. These analyses should include the often overlooked but critically important domestic service sectors such as retail and housing construction.

Suggested Citation

  • Palmade, Vincent, 2005. "Industry level analysis : the way to identify the binding constraints to economic growth," Policy Research Working Paper Series 3551, The World Bank.
    • Handle: RePEc:wbk:wbrwps:3551
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    Citations

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    Cited by:

    1. Harrison, Ann E. & Lin, Justin Yifu & Xu, Lixin Colin, 2014. "Explaining Africa’s (Dis)advantage," World Development, Elsevier, vol. 63(C), pages 59-77.
    2. World Bank, 2007. "Building Knowledge Economies : Advanced Strategies for Development," World Bank Publications - Books, The World Bank Group, number 6853.
    3. World Bank Group, 2017. "Increasing Agribusiness Growth in Bhutan," World Bank Publications - Reports 28538, The World Bank Group.
    4. World Bank, 2011. "Philippines," World Bank Publications - Reports 27384, The World Bank Group.
    5. Brunner, Hans-Peter & Cali, Massimiliano, 2006. "The dynamics of manufacturing competitiveness in South Asia: An analysis through export data," Journal of Asian Economics, Elsevier, vol. 17(4), pages 557-582, October.
    6. repec:kqi:journl:2017-1-1 is not listed on IDEAS
    7. Sunita Kikeri & Thomas Kenyon & Vincent Palmade, 2006. "Reforming the Investment Climate : Lessons for Practitioners," World Bank Publications - Books, The World Bank Group, number 7096.
    8. Benhassine, Najy & Raballand, Gaël, 2009. "Beyond ideological cleavages: A unifying framework for industrial policies and other public interventions," Economic Systems, Elsevier, vol. 33(4), pages 293-309, December.
    9. Kenyon, Thomas, 2007. "A framework for thinking about enterprise formalization policies in developing countries," Policy Research Working Paper Series 4235, The World Bank.
    10. William F. Fox & Matthew N. Murray, 2014. "Taxing the small: Fostering tax compliance among small enterprises in developing countries," Chapters, in: Richard M. Bird & Jorge Martinez-Vazquez (ed.), Taxation and Development: The Weakest Link?, chapter 6, pages 170-192, Edward Elgar Publishing.
    11. Kikeri, Sunita & Kenyon,Thomas & Palmade, Vincent, 2006. "Reforming the investment climate : lessons for practitioners," Policy Research Working Paper Series 3986, The World Bank.
    12. World Bank, 2007. "West Bank and Gaza - Investment Climate Assessment : Unlocking the Potential of the Private Sector," World Bank Publications - Reports 7792, The World Bank Group.

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