Good and Bad Institutions: Is the Debate Over?Cross-Country Firm-Level Evidence from theTextile Industry

Using firm-level data from nine developing countries we demonstrate that (a) certaininstitutions like restrictive labour market regulations that are considered to be bad foreconomic growth might be beneficial for production efficiency, whereas (b) good businessenvironment which is considered to be beneficial for economic growth might have an adverseimpact on production efficiency. We argue that our results suggest that the debate about theimplications of institutional quality is far from being over, and classification of institutions into“good” and “bad” might be premature....