In developed countries, where firms face a lot of competition, creative destruction from significant business competition weeds out weaker firms and allows stronger firms to grow rapidly. However, this doesn’t seem to occur in developing nations.
Ufuk Akcigit, an assistant economics professor at the University of Chicago, examined this phenomenon in his paper “Lack of Selection and Limits to Delegation: Firm Dynamics in Developing Countries,” presented at the St. Louis Advances in Research (STLAR) Conference on April 7-8. In the video above, he discussed his work in an interview with St. Louis Fed Vice President and Economist David Andolfatto.
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