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Country Size and the Rule of Law: Resuscitating Montesquieu

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Author Info
Hansson, Gustav () (Department of Economics, School of Business, Economics and Law, Göteborg University)
Olsson, Ola () (Department of Economics, School of Business, Economics and Law, Göteborg University)

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Abstract

The political and economic impact of country size has been a frequently discussed issue in social science. In accordance with the general hypothesis of Montesquieu, this paper demonstrates that there is a robust negative relationship between the size of country territory and a measure of the rule of law for a large cross-section of countries. We propose that there are two main reasons for this regularity; firstly that institutional quality often has the character of a local public good that is imperfectly spread across space from the capital to the hinterland, and secondly that a large territory usually is accompanied by valuable rents that tend to distort property rights institutions. Our empirical analysis further shows that whether the capital is centrally or peripherally located within the country matters for the average level of rule of law.

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File URL: http://hdl.handle.net/2077/2721
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Paper provided by Göteborg University, Department of Economics in its series Working Papers in Economics with number 200.

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Length: 37 pages
Date of creation: 28 Mar 2006
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Handle: RePEc:hhs:gunwpe:0200

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Postal: Department of Economics, School of Business, Economics and Law, Göteborg University Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/
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Related research
Keywords: country size; rule of law; institutions; development; Montesquieu;

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Find related papers by JEL classification:
N40 - Economic History - - Government, War, Law, and Regulation - - - General, International, or Comparative
N50 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - General, International, or Comparative
P33 - Economic Systems - - Socialist Institutions and Their Transitions - - - International Linkages

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  2. Congdon Fors, Heather & Olsson, Ola, 2005. "Endogenous Institutional Change After Independence," Working Papers in Economics 163, Göteborg University, Department of Economics. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Dalgaard, C. & Olsson, O., 2007. "Why Are Market Economies Politically Stable? A Theory of Capitalist Cohesion," Cambridge Working Papers in Economics 0765, Faculty of Economics, University of Cambridge. [Downloadable!]
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