Patterns of Industrial Development Revisited : The Role of Finance
The authors reexamine the role of financial market development in the intersectoral allocation of resources. First, they characterize the assumptions underlying previous work in this area, in particular, that of Rajan and Zingales (1998). The autho...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2002/08/1997780/patterns-industrial-development-revisted-role-finance http://hdl.handle.net/10986/19269 |
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okr-10986-192692021-04-23T14:03:42Z Patterns of Industrial Development Revisited : The Role of Finance Fisman, Raymond Love, Inessa INDUSTRIAL DEVELOPMENT CAPITAL MARKETS ECONOMIC GROWTH FINANCIAL DEVELOPMENT PRIVATE BANKS ALLOCATION OF RESOURCES GROWTH PATTERNS ACCOUNTING STANDARDS ACTUAL GROWTH AVERAGE GROWTH AVERAGE LEVEL CORPORATE GOVERNANCE CORRUPTION COUNTRY SPECIFIC DEVELOPED COUNTRIES DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT RESEARCH DIVERSIFICATION DOMESTIC CREDIT ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMICS EMPIRICAL WORK ERROR TERM ERROR TERMS FACTOR ENDOWMENTS FACTOR PRICES FINANCIAL ASSETS FINANCIAL DEVELOPMENT FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL SYSTEMS FIXED EFFECTS FUNCTIONAL FORM GROWTH PATTERN GROWTH PROCESS GROWTH PROSPECTS GROWTH RATE GROWTH RATES HIGH INCOME INCOME DISTRIBUTIONS INCOME ELASTICITIES INCOME LEVELS INCOME PER CAPITA INDEPENDENT VARIABLE INDUSTRIAL DEVELOPMENT INNOVATION INTERMEDIARIES INTERMEDIATE GOODS LEGAL ORIGIN MARKET CAPITALIZATION MOTIVATION NON-LINEAR FUNCTION PER CAPITA INCOME POLICY RESEARCH PRIVATE SECTOR PRODUCTION FUNCTION RESOURCE ALLOCATION SECTORAL COMPOSITION SECTORAL GROWTH RATES SOCIAL NETWORKS STANDARD DEVIATION STATISTICAL TECHNIQUES TRADE OPENNESS UNDERDEVELOPED COUNTRIES The authors reexamine the role of financial market development in the intersectoral allocation of resources. First, they characterize the assumptions underlying previous work in this area, in particular, that of Rajan and Zingales (1998). The authors argue that Rajan and Zingales (1998) implicitly test whether financial intermediaries allow firms to better respond to global shocks to growth opportunities. Second, the authors propose a more efficient alternative test of this hypothesis using statistical techniques developed in the social networks literature. Specifically, they find that countries have more highly correlated growth rates across sectors when they have well-developed financial markets, suggesting that financial markets play an important role in allowing firms to take advantage of global growth opportunities. These results are particularly strong when financial development takes into account both the level and composition of financial development: private banking appears to play a particularly important role in resource allocation. The authors' technique allows them to further distinguish between the "growth opportunities" hypothesis stated above and the alternative "finance and external dependence" hypothesis, which implies that countries with similar levels of financial development should specialize in similar sectors. They do not find evidence to support this alternative view of finance and development. 2014-08-07T20:19:54Z 2014-08-07T20:19:54Z 2002-08 http://documents.worldbank.org/curated/en/2002/08/1997780/patterns-industrial-development-revisted-role-finance http://hdl.handle.net/10986/19269 English en_US Policy Research Working Paper;No. 2877 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
INDUSTRIAL DEVELOPMENT CAPITAL MARKETS ECONOMIC GROWTH FINANCIAL DEVELOPMENT PRIVATE BANKS ALLOCATION OF RESOURCES GROWTH PATTERNS ACCOUNTING STANDARDS ACTUAL GROWTH AVERAGE GROWTH AVERAGE LEVEL CORPORATE GOVERNANCE CORRUPTION COUNTRY SPECIFIC DEVELOPED COUNTRIES DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT RESEARCH DIVERSIFICATION DOMESTIC CREDIT ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMICS EMPIRICAL WORK ERROR TERM ERROR TERMS FACTOR ENDOWMENTS FACTOR PRICES FINANCIAL ASSETS FINANCIAL DEVELOPMENT FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL SYSTEMS FIXED EFFECTS FUNCTIONAL FORM GROWTH PATTERN GROWTH PROCESS GROWTH PROSPECTS GROWTH RATE GROWTH RATES HIGH INCOME INCOME DISTRIBUTIONS INCOME ELASTICITIES INCOME LEVELS INCOME PER CAPITA INDEPENDENT VARIABLE INDUSTRIAL DEVELOPMENT INNOVATION INTERMEDIARIES INTERMEDIATE GOODS LEGAL ORIGIN MARKET CAPITALIZATION MOTIVATION NON-LINEAR FUNCTION PER CAPITA INCOME POLICY RESEARCH PRIVATE SECTOR PRODUCTION FUNCTION RESOURCE ALLOCATION SECTORAL COMPOSITION SECTORAL GROWTH RATES SOCIAL NETWORKS STANDARD DEVIATION STATISTICAL TECHNIQUES TRADE OPENNESS UNDERDEVELOPED COUNTRIES |
| spellingShingle |
INDUSTRIAL DEVELOPMENT CAPITAL MARKETS ECONOMIC GROWTH FINANCIAL DEVELOPMENT PRIVATE BANKS ALLOCATION OF RESOURCES GROWTH PATTERNS ACCOUNTING STANDARDS ACTUAL GROWTH AVERAGE GROWTH AVERAGE LEVEL CORPORATE GOVERNANCE CORRUPTION COUNTRY SPECIFIC DEVELOPED COUNTRIES DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT RESEARCH DIVERSIFICATION DOMESTIC CREDIT ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMICS EMPIRICAL WORK ERROR TERM ERROR TERMS FACTOR ENDOWMENTS FACTOR PRICES FINANCIAL ASSETS FINANCIAL DEVELOPMENT FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL SYSTEMS FIXED EFFECTS FUNCTIONAL FORM GROWTH PATTERN GROWTH PROCESS GROWTH PROSPECTS GROWTH RATE GROWTH RATES HIGH INCOME INCOME DISTRIBUTIONS INCOME ELASTICITIES INCOME LEVELS INCOME PER CAPITA INDEPENDENT VARIABLE INDUSTRIAL DEVELOPMENT INNOVATION INTERMEDIARIES INTERMEDIATE GOODS LEGAL ORIGIN MARKET CAPITALIZATION MOTIVATION NON-LINEAR FUNCTION PER CAPITA INCOME POLICY RESEARCH PRIVATE SECTOR PRODUCTION FUNCTION RESOURCE ALLOCATION SECTORAL COMPOSITION SECTORAL GROWTH RATES SOCIAL NETWORKS STANDARD DEVIATION STATISTICAL TECHNIQUES TRADE OPENNESS UNDERDEVELOPED COUNTRIES Fisman, Raymond Love, Inessa Patterns of Industrial Development Revisited : The Role of Finance |
| relation |
Policy Research Working Paper;No. 2877 |
| description |
The authors reexamine the role of
financial market development in the intersectoral allocation
of resources. First, they characterize the assumptions
underlying previous work in this area, in particular, that
of Rajan and Zingales (1998). The authors argue that Rajan
and Zingales (1998) implicitly test whether financial
intermediaries allow firms to better respond to global
shocks to growth opportunities. Second, the authors propose
a more efficient alternative test of this hypothesis using
statistical techniques developed in the social networks
literature. Specifically, they find that countries have more
highly correlated growth rates across sectors when they have
well-developed financial markets, suggesting that financial
markets play an important role in allowing firms to take
advantage of global growth opportunities. These results are
particularly strong when financial development takes into
account both the level and composition of financial
development: private banking appears to play a particularly
important role in resource allocation. The authors'
technique allows them to further distinguish between the
"growth opportunities" hypothesis stated above and
the alternative "finance and external dependence"
hypothesis, which implies that countries with similar levels
of financial development should specialize in similar
sectors. They do not find evidence to support this
alternative view of finance and development. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Fisman, Raymond Love, Inessa |
| author_facet |
Fisman, Raymond Love, Inessa |
| author_sort |
Fisman, Raymond |
| title |
Patterns of Industrial Development Revisited : The Role of Finance |
| title_short |
Patterns of Industrial Development Revisited : The Role of Finance |
| title_full |
Patterns of Industrial Development Revisited : The Role of Finance |
| title_fullStr |
Patterns of Industrial Development Revisited : The Role of Finance |
| title_full_unstemmed |
Patterns of Industrial Development Revisited : The Role of Finance |
| title_sort |
patterns of industrial development revisited : the role of finance |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2002/08/1997780/patterns-industrial-development-revisted-role-finance http://hdl.handle.net/10986/19269 |
| _version_ |
1764439639604592640 |