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Natural Openness and Good Government (2000)
| Citations: | 13 - 0 self |
BibTeX
@MISC{Wei00naturalopenness,
author = {Shang-jin Wei and Chong-en Bai and Roberta Gatti and David Parsley},
title = {Natural Openness and Good Government},
year = {2000}
}
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Abstract
Rodrik, Caroline van Rijckeghem, and seminar participants at the World Bank for helpful discussion. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the World Bank, its Executive Directors, or the countries they This paper offers a (possibly) new interpretation of the connection between openness and good governance with a conceptual model and some empirical evidence. Assuming that corruption and bad governance drive out international trade and investment more than domestic trade and investment, the model suggests that a “naturally more open economy”—as determined by its size and geography—would devote more resources to building good institutions and would display lower corruption in equilibrium. In the data, “naturally more open economies ” do exhibit less corruption even after taking into account their levels of development. “Residual openness”—which potentially includes trade policies—is found not to be important once “natural openness ” is accounted for. Moreover, “naturally more open economies ” also tend to pay better civil servant salaries relative to their private sector alternatives—indicative of the marginal benefit of good governance in a society’s revealed preference. These patterns are consistent with the conceptual model
Keyphrases
natural openness good government open economy good governance world bank conceptual model empirical evidence marginal benefit good institution seminar participant helpful discussion residual openness trade policy bad governance drive executive director international trade new interpretation domestic trade civil servant salary private sector alternative
