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The Historical Roots of Corruption and Economic Development in Italy

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  • Ilaria Petrarca
  • Roberto Ricciuti

Abstract

We claim that a sequential mechanism linking history to development exists: first, history defines the quality of social capital; then, social capital determines the level of corruption; finally, corruption affects economic performance. We test this hypothesis on a dataset of Italian provinces, and address the possible endogeneity of corruption by applying an IV model. We use three sets of historical instruments for corruption: 1) foreign dominations in 16th-17th century, 2) autocracy/autonomous rule in the 14th century, and 3) an index of social capital between in the 19th-20th century. The results indicate a significant impact of historically-driven corruption on development.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 4212.

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Date of creation: 2013
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Handle: RePEc:ces:ceswps:_4212

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Related research

Keywords: corruption; economic development; institutions; social capital; history;

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  1. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2002. "Institutions Rule: The Primacy of Institutions over Geography and Integration in Economic Development," NBER Working Papers 9305, National Bureau of Economic Research, Inc.
  2. A. Di Liberto & M. Sideri, 2011. "Past dominations, current institutions and the Italian regional economic performance," Working Paper CRENoS 201115, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  3. Stephen Knack & Philip Keefer, 1995. "Institutions And Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economics and Politics, Wiley Blackwell, Wiley Blackwell, vol. 7(3), pages 207-227, November.
  4. Kugler, Maurice & Verdier, Thierry & Zenou, Yves, 2003. "Organized Crime, Corruption and Punishment," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3806, C.E.P.R. Discussion Papers.
  5. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 110(3), pages 681-712, August.
  6. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert Vishny, 1998. "The Quality of Goverment," NBER Working Papers 6727, National Bureau of Economic Research, Inc.
  7. Krueger, Anne O, 1974. "The Political Economy of the Rent-Seeking Society," American Economic Review, American Economic Association, American Economic Association, vol. 64(3), pages 291-303, June.
  8. Vito Tanzi, 1998. "Corruption Around the World," IMF Working Papers 98/63, International Monetary Fund.
  9. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, American Economic Association, vol. 91(5), pages 1369-1401, December.
  10. Vito Tanzi, 1998. "Corruption Around the World: Causes, Consequences, Scope, and Cures," IMF Staff Papers, Palgrave Macmillan, vol. 45(4), pages 559-594, December.
  11. Nadia Fiorino & Emma Galli & Ilaria Petrarca, 2012. "Corruption and Growth: Evidence from the Italian Regions," European Journal of Government and Economics, Europa Grande, vol. 1(2), pages 126-144, December.
  12. Edward L. Glaeser & Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer, 2004. "Do Institutions Cause Growth?," NBER Working Papers 10568, National Bureau of Economic Research, Inc.
  13. Guido de Blasio & Giorgio Nuzzo, 2010. "Historical Traditions Of Civicness And Local Economic Development," Journal of Regional Science, Wiley Blackwell, Wiley Blackwell, vol. 50(4), pages 833-857.
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