Finance and Governance in Developing Economies

33 Pages Posted: 3 Mar 2011  

Randall Morck

National Bureau of Economic Research (NBER); University of Alberta - Department of Finance and Statistical Analysis

Multiple version iconThere are 3 versions of this paper

Date Written: February 28, 2011

Abstract

Classic Big Push industrialization envisions state planners coordinating economic activity to internalize a range of externalities that otherwise lock in a low-income equilibrium, but runs afoul of well-known government failure problems. Successful Big Push coordination may occur instead when a large business group, acting in its controlling shareholder’s self-interest, coordinates the establishment and expansion of businesses in diverse sectors. Where business groups play this role, many basic axioms of Anglo-American corporate governance, including the advocacy of shareholder value maximization and contestable corporate control, must be qualified.

Keywords: Big Push, business groups, family firms, Network externalities, rent seeking, public choice

JEL Classification: G3, O1, O25, P11

Suggested Citation

Morck, Randall, Finance and Governance in Developing Economies (February 28, 2011). Available at SSRN: https://ssrn.com/abstract=1774263 or http://dx.doi.org/10.2139/ssrn.1774263

Randall K. Morck (Contact Author)

National Bureau of Economic Research (NBER)

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University of Alberta - Department of Finance and Statistical Analysis ( email )

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