Collier, Paul and Goderis, Benedikt (2009): Structural policies for shock-prone developing countries.
Download (184kB) | Preview
Developing countries frequently face large adverse shocks to their economies. We study two distinct types of such shocks: large declines in the price of a country’s commodity exports and severe natural disasters. Unsurprisingly, adverse shocks reduce the short-term growth of constant-price GDP and we analyse which structural policies help to minimize these losses. Structural policies are incentives and regulations that are maintained for long periods, contrasting with policy responses to shocks, the analysis of which has dominated the literature. We show that some previously neglected structural policies have large effects that are specific to particular types of shock. In particular, regulations which reduce the speed of firm exit substantially increase the short-term growth loss from adverse non-agricultural export price shocks and so are particularly ill-suited to mineral exporting economies. Natural disasters appear to be better accommodated by labour market policies, perhaps because such shocks directly dislocate the population.
|Item Type:||MPRA Paper|
|Original Title:||Structural policies for shock-prone developing countries|
|English Title:||Structural policies for shock-prone developing countries|
|Keywords:||commodity price shocks; natural disasters; growth, policies|
|Subjects:||Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q3 - Nonrenewable Resources and Conservation > Q38 - Government Policy
O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Empirical Studies of Economic Growth ; Aggregate Productivity ; Cross-Country Output Convergence
Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q54 - Climate ; Natural Disasters and Their Management ; Global Warming
|Depositing User:||Benedikt Goderis|
|Date Deposited:||16. Sep 2009 14:08|
|Last Modified:||02. Jun 2015 11:09|
Broda, C. (2004) Terms-of-trade and exchange rate regimes in developing countries, Journal of International Economics, 63, 31-58.
Chor, D. and Freeman, R.B. (2004) The 2004 Global Labor Survey: workplace institutions and practices around the world, NBER Working Paper No. 11598. National Bureau of Economic Research, Cambridge, MA.
Collier, P. and Dehn, J. (2001) Aid, shocks, and growth, Policy Research Working Paper No. 2688, World Bank, Washington DC.
Collier, P. and Goderis, B. (2008) Commodity prices, growth, and the natural resource curse: reconciling a conundrum, OxCarre Research Paper No. 2008-14, Department of Economics, University of Oxford.
Collier, P. and Goderis, B. (2009) Structural policies for shock-prone developing countries, CSAE Working Paper No. 2009-03, Department of Economics, University of Oxford.
Collier, P. and Goderis, B. (2009) Does aid mitigate external shocks? Review of Development Economics, forthcoming.
Deaton, A.S. and Miller, R.I. (1995) International commodity prices, macroeconomic performance, and politics in Sub-Saharan Africa, Princeton Studies in International Finance, 79.
Dehn, J. (2000) Commodity price uncertainty in developing countries, CSAE Working Paper No. 2000-12, Department of Economics, University of Oxford.
Gleditsch, K.S. (2004) A revised list of wars between and within independent states, 1816-2002, International Interactions, 30, 231-62.
Henisz, W.J. (2002) The institutional environment for infrastructure investment, Industrial and Corporate Change, 11, 355-89.
International Monetary Fund (2003) Fund assistance for countries facing exogenous shocks, Policy Development and Review Department, International Monetary Fund, Washington DC.
Kaufmann, D., Kraay, A., and Mastruzzi, M. (2008) Governance matters VII: governance indicators for 1996-2007, World Bank Policy Research Working Paper No. 4654, World Bank, Washington DC.
Loayza, N.V. and Raddatz, C. (2007) The structural determinants of external vulnerability, World Bank Economic Review, 21, 359-87.
Raddatz, C. (2007) Are external shocks responsible for the instability of output in low-income countries? Journal of Development Economics, 84, 155-87.
Reinhart, C.M. and Rogoff, K.S. (2004) The modern history of exchange rate arrangements: a reinterpretation, Quarterly Journal of Economics, 119, 1-48.
World Bank (2007) Doing Business, World Bank, Washington DC.
World Economic Forum (2008) The Global Competitiveness Report 2008-2009, World Economic Forum, Geneva.