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Featuring Eric Werker
Harvard Business School
Is what's good for General Motors good for America? In this seminar, Eric Werker will discuss whether high profits, as measured by the mark-up ratio of firms' profits to their costs, are good for growth. Using industry-level data from manufacturing in over 100 countries, Werker and his coauthors find that high mark-ups are a strong negative predictor of growth. The negative effect is strongest in poor countries, suggesting that high profits — possibly due to monopolies in the business environment — stymie economic development rather than enable it.