The Determinants of Economic Development Insitution or Geography ?
AbstractThis work investigates the roots of economic development. The debate about the predominance of institutions over geography has not yet reached a firm conclusion: this analysis wants to highlight the main difficulties that one should address in order to find which are the real determinants of long-run economic growth. I argue that the institutional view is not so strong as it may appear: different specifications and different institutional indicators undermine the exclusive importance of institutions. The results of Acemoglu, Johnson and Robinson in favour of the institutional approach are no more valid if other institutional indicators are used instead of the risk of expropriation.;Geographical factors related to the health environment and the physical integration in the world markets play a role in the process of economic growth, beyond their effect on institutional development. Geography seems to be a factor even using different specification of the model. However, in this case, the Instrumental Variable procedure is far from being perfect: lack of sensible indicators and strong problem of endogeneity are the main difficulties. A closest look at the economic history and ecology should always be part of this sort of analysis.
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Bibliographic InfoPaper provided by Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali in its series Working Papers with number 217.
Date of creation: Sep 2004
Date of revision:
economic development; institution gepgraphy; instrumental variables;
Find related papers by JEL classification:
- C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- O18 - Economic Development, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
- P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
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