Mr. Dmitry Gershenson, Mr. Albert Jaeger, and Mr. Subir Lall
Structural reforms were hoped to increase the scale and number of high-performing firms, which also tend to be exporting firms. Based on the results of a firm survey conducted by IMF staff, there is a perception that many reforms had at least some positive effects, but few reforms are seen as having had a significant impact. Firms’ perceived urgency to revisit or step up reforms, especially in the public and financial sectors, likely reflects the fact that these reforms are critical for reducing high transaction costs, especially for the exporting firms. The limited perceived impact of public sector reforms likely reflects implementation capacity constraints.
Ms. Ling H Tan, Ms. Kala Krishna, and Mr. Ram Ranjan
This paper models investment/entry decisions in a competitive industry that is subject to a quantity control on an input for production. The quantity control is implemented by auctioning licenses for the restricted input (e.g., a pollution permit or a production license). The paper shows that liberalizing the quantity control could reduce investment in the industry under certain circumstances. Furthermore, the level of investment is quite different when licenses are tradable than when they are not. Key factors in the comparison include the elasticity of demand for the final good and the degree of input substitutability. Two examples are computed to illustrate the results.
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