Also how do you think about conglomerate-like activity in developed countries (current example everyone uses is Google/Alphabet, historical would be Bell Labs). There is no shortage of long time-horizon investment capital in the system in the form of pension funds, endowments, etc., so is this sort of behavior just empire-building that could be replicated by the market in the form of focused moonshot projects funded by long-term investors, or do you think there is something useful in having the projects be appendages of a dominant corporation?
Well, I think I covered this in the article — companies with different divisions prefer to spin them off generally, and have each sector seek investment individually.
I think 1 makes a lot of sense to me. On a somewhat related note, could it also be that conglomerates have an easier time with currency/capital controls in some manner (I don't know too much about the specifics)? Easier to repurpose export earnings to imports without having to go through banking system?
Corruption. Corruption increases the calculated productivity of firms with corrupt managers since they generate more revenue with the same inputs. Politically connected managers will appear to provide a magical productivity boost that's actually just about exclusion from regulations and sweet deal contracts.
Another factor could be political lobby, as governments are more chaotic and firms sizes are smaller having a shared voice to the government seems like an advantage.
Also how do you think about conglomerate-like activity in developed countries (current example everyone uses is Google/Alphabet, historical would be Bell Labs). There is no shortage of long time-horizon investment capital in the system in the form of pension funds, endowments, etc., so is this sort of behavior just empire-building that could be replicated by the market in the form of focused moonshot projects funded by long-term investors, or do you think there is something useful in having the projects be appendages of a dominant corporation?
Well, I think I covered this in the article — companies with different divisions prefer to spin them off generally, and have each sector seek investment individually.
I think 1 makes a lot of sense to me. On a somewhat related note, could it also be that conglomerates have an easier time with currency/capital controls in some manner (I don't know too much about the specifics)? Easier to repurpose export earnings to imports without having to go through banking system?
Corruption. Corruption increases the calculated productivity of firms with corrupt managers since they generate more revenue with the same inputs. Politically connected managers will appear to provide a magical productivity boost that's actually just about exclusion from regulations and sweet deal contracts.
Another factor could be political lobby, as governments are more chaotic and firms sizes are smaller having a shared voice to the government seems like an advantage.