Institutional development and hypercompetition in emerging economies

Abstract

This study applies previous analysis on hypercompetition to emerging economies. We propose that development of the institutional context will contribute to generate conditions of hypercompetition in emerging economies. Empirical evidence from Latin America indicates that (1) persistent superior economic performance is possible; (2) the hazard rate for exiting the superior economic performance stratum has increased over time; (3) the development of the institutional context accelerates the rate of exiting the superior economic performance stratum; and (4) domestic firms find it more difficult to remain in the superior economic performance stratum than subsidiaries of multinational corporations and multicountry firms. These findings are consistent with the onset of an age of temporary advantage in emerging economies.