Competition, Information, and Development

Abstract
Developing countries suffer from weak institutions: inefficient tax systems, lack of auditing expertise, poor education, corruption, inefficient financial systems, lack of credibility of governments, capture of politicians and bureaucrats. This paper asks whether and how each of these problems calls for a different view of competition, to what extent competition helps solve these problems, and to what extent it is implementable. Even though the pressure of competition is generally favorable, some care must be exerted in implementing it in the context of weak institutions. The need to support institutional improvements and to condition aid on such changes is great.