Chapter 4

Institutions and Risk

Reforms will need to provide more equal access to economic opportunities, promote transparency, improve access to credit by strengthening financial market infrastructures, and, more generally, enhance the business environment by cutting red tape and streamlining rules and procedures.

—International Monetary Fund, Regional Economic Outlook, Middle East and Central Asia, April 2012.1

Institutional voids are obstacles for doing business in emerging markets but they can also be a source of advantage for those companies—foreign or domestic—that have local knowledge, privileged access to resources, or other capabilities that can help substitute for missing market institutions.

—Tarun Khanna and Krishna G. Palepu

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