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Institutions, Policy and Culture in the Development Process (IPCDP)
Start date: Jan 1, 2009, End date: Jun 30, 2014 PROJECT  FINISHED 

This project aims at developing theoretical and empirical research on the structural transformation that accompanies economic development and on the determinants of its success or failure. This transformation involves changes in policies, institutions, and even preferences and social hierarchies. The project consists of four subprojects. Since China represents the most spectacular ongoing episode of economic transition, four of them focus on the Chinese experience, while the remaining ones address general issues in growth and development. The first subproject analyses some puzzling features of China's recent growth experience, such as the coexistence of high growth with increasing capital export, and the falling labour share, with the aid of a theory which emphasises the efficiency gains associated with the reallocation between firms of different productivity. Since changes in income distribution are an important element, and a concern, of the Chinese transition, the three following subprojects focus, respectively, on the crisis of the system of old age insurance, the effects of the rise of the middle class, and the introduction of special economic zones in the 1980s. Two subprojects study different aspects of competition policy in development. The first one focuses on intellectual property right protection, emphasising the link between innovation, technology adoption and human capital accumulation. The second one studies the coordinating role of industrial policy and how its scope changes with development. The last two subprojects focus on culture. The diffusion of preferences and values that foster cooperation rather than conflict is no less important than incentives for technology adoption. Likewise, the rise of an "entrepreneurial spirit" is an engine of growth in the development transition. We plan to study the emergence and cultural transmission of preferences that are conducive to economic growth, and how they interact with the process of structural change.

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