Two to Tango: Firms’ Mismanagement, State Capacity, and the Low Productivity Trap

There is evidence that productive firms in developing countries like India, China, and Mexico do not expand as rapidly as their US counterparts due to a mix of financial -specially for smaller firms- and organizational factors -mainly in larger firms- (Bartelsman, et al., 2009, Hsieh and Klenow, 2009)