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The Colonial Origins of Comparative Development: An Empirical Analysis
- AMERICAN ECONOMIC REVIEW
, 2002
"... We exploit differences in early colonial experience to estimate the effect of institutions on economic performance. Our argument is that Europeans adopted very different colonization policies in different colonies, with different associated institutions. The choice of colonization strategy was, at l ..."
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Cited by 1657 (41 self)
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We exploit differences in early colonial experience to estimate the effect of institutions on economic performance. Our argument is that Europeans adopted very different colonization policies in different colonies, with different associated institutions. The choice of colonization strategy was, at least in part, determined by the feasibility of whether Europeans could settle in the colony. In places where Europeans faced high mortality rates, they could not settle and they were more likely to set up worse (extractive) institutions. These early institutions persisted to the present. We document these hypotheses in the data. Exploiting differences in mortality rates faced by soldiers, bishops and sailors in the colonies during the 18th and 19th centuries as an instrument for current institutions, we estimate large effects of institutions on income per capita. Our estimates imply that a change from the worst (Zaire) to the best (US or New Zealand) institutions in our sample would be associated with a five fold increase in income per capita.
Does trade cause growth
- American Economic Review
, 1999
"... you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you may use content in the JSTOR archive only for your personal, non-commercial use. Please contact the publisher regarding any further use of this work. Publisher contact inform ..."
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Cited by 1048 (14 self)
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you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you may use content in the JSTOR archive only for your personal, non-commercial use. Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained at
Institutions Rule: The Primacy of Institutions over Geography and Integration in Economic Development
- FREE UNIVERSITY OF BERLIN
, 2004
"... We estimate the respective contributions of institutions, geography, and trade in determining income levels around the world, using recently developed instrumental variables for institutions and trade. Our results indicate that the quality of institutions “trumps” everything else. Once institutions ..."
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Cited by 817 (28 self)
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We estimate the respective contributions of institutions, geography, and trade in determining income levels around the world, using recently developed instrumental variables for institutions and trade. Our results indicate that the quality of institutions “trumps” everything else. Once institutions are controlled for, conventional measures of geography have at best weak direct effects on incomes, although they have a strong indirect effect by influencing the quality of institutions. Similarly, once institutions are controlled for, trade is almost always insignificant, and often enters the income equation with the “wrong” (i.e., negative) sign. We relate our results to recent literature, and where differences exist, trace their origins to choices on samples, specification, and instrumentation.
Institutions as the Fundamental Cause of Long-Run Growth
- IN HANDBOOK OF ECONOMIC GROWTH, ED. PHILIPPE AGHION AND STEPHEN DURLAUF
, 2005
"... This paper develops the empirical and theoretical case that differences in economic institutions are the fundamental cause of differences in economic development. We first document the empirical importance of institutions by focusing on two “quasi-natural experiments” in history, the division of K ..."
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Cited by 458 (9 self)
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This paper develops the empirical and theoretical case that differences in economic institutions are the fundamental cause of differences in economic development. We first document the empirical importance of institutions by focusing on two “quasi-natural experiments” in history, the division of Korea into two parts with very different economic institutions and the colonization of much of the world by European powers starting in the fifteenth century. We then develop the basic outline of a framework for thinking about why economic institutions differ across countries. Economic institutions determine the incentives of and the constraints on economic actors, and shape economic outcomes. As such, they are social decisions, chosen for their consequences. Because different groups and individuals typically benefit from different economic institutions, there is generally aconflict over these social choices, ultimately resolved in favor of groups with greater political power. The distribution of political power in society is in turn determined by political institutions and the distribution of resources. Political institutions allocate de
Reversal of fortune: geography and institutions in the making of modern world income,Quarterly
- Journal of Economics,
, 2002
"... Among countries colonized by European powers during the past 500 years, those that were relatively rich in 1500 are now relatively poor. We document this reversal using data on urbanization patterns and population density, which, we argue, proxy for economic prosperity. This reversal weighs against ..."
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Cited by 450 (31 self)
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Among countries colonized by European powers during the past 500 years, those that were relatively rich in 1500 are now relatively poor. We document this reversal using data on urbanization patterns and population density, which, we argue, proxy for economic prosperity. This reversal weighs against a view that links economic development to geographic factors. Instead, we argue that the reversal reflects changes in the institutions resulting from European colonialism. The European intervention appears to have created an "institutional reversal" among these societies, meaning that Europeans were more likely to introduce institutions encouraging investment in regions that were previously poor. This institutional reversal accounts for the reversal in relative incomes. We provide further support for this view by documenting that the reversal in relative incomes took place during the late eighteenth and early nineteenth centuries, and resulted from societies with good institutions taking advantage of the opportunity to industrialize.
It’s Not Factor Accumulation: Stylized Facts and Growth Models,” World Bank.
, 2001
"... Abstract: We document five stylized facts of economic growth. (1) The "residual" rather than factor accumulation accounts for most of the income and growth differences across nations. (2) Income diverges over the long run. (3) Factor accumulation is persistent while growth is not persiste ..."
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Cited by 427 (14 self)
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Abstract: We document five stylized facts of economic growth. (1) The "residual" rather than factor accumulation accounts for most of the income and growth differences across nations. (2) Income diverges over the long run. (3) Factor accumulation is persistent while growth is not persistent and the growth path of countries exhibits remarkable variation across countries. (4) Economic activity is highly concentrated, with all factors of production flowing to the richest areas. (5) National policies closely associated with long-run economic growth rates. We argue that these facts do not support models with diminishing returns, constant returns to scale, some fixed factor of production, and that highlight the role of factor accumulation. Empirical work, however, does not yet decisively distinguish among the different theoretical conceptions of "total factor productivity growth." Economists should devote more effort towards modeling and quantifying total factor productivity.
Determinants of long-term growth: a Bayesian Averaging of Classical Estimates (BACE) approach
, 2003
"... This paper examines the robustness and joint interaction of explanatory variables in cross-country economic growth regressions. It employs a novel approach, Bayesian Averaging of Classical Estimates (BACE), which constructs estimates as a weighted average of OLS estimates for every possible combina ..."
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Cited by 374 (3 self)
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This paper examines the robustness and joint interaction of explanatory variables in cross-country economic growth regressions. It employs a novel approach, Bayesian Averaging of Classical Estimates (BACE), which constructs estimates as a weighted average of OLS estimates for every possible combination of included variables. The weights applied to individual regressions are justified on Bayesian grounds in a way similar to the well-known Schwarz model selection criterion. Of 67 explanatory variables we find 18 to be robustly partially correlated with long-term growth and another three variables to be marginally related. Of all the variables considered, the strongest evidence is for the relative price of investment, primary school enrollment and the initial level of real GDP per capita.
Enterprise restructuring in transition: A quantitative survey
, 2000
"... There are now over 125 empirical papers that analyze the process of enterprise restructuring in transition ..."
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Cited by 373 (10 self)
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There are now over 125 empirical papers that analyze the process of enterprise restructuring in transition
