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Institutions and the Long-run Impact of Early Development

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  • James, Ang

Abstract

We study the role of institutional development as a causal mechanism of history affecting current economic performance. Several indicators capturing different dimensions of early development in 1500 AD are used to remove the endogenous component of the variations in institutions. These indicators are adjusted with large-scale movements of people across international borders using the global migration matrix of Putterman and Weil (2010) to account for the fact that the ancestors of a population have facilitated the diffusion of knowledge when they migrate. The exogenous component of institutions due to historical development is found to be a significant determinant of current output. By demonstrating that the relationship between early development and current economic performance works through the channel of institutions and that better institutions can be traced back to historical factors, the results of this paper shed some light on how history has played a role in shaping long-run comparative development.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 42199.

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Date of creation: Oct 2012
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Handle: RePEc:pra:mprapa:42199

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Keywords: institutions; long-run comparative development; technology adoption;

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References

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Citations

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Cited by:
  1. Ang, James B. & Kumar, Sanjesh, 2014. "Financial development and barriers to the cross-border diffusion of financial innovation," Journal of Banking & Finance, Elsevier, vol. 39(C), pages 43-56.
  2. James, Ang, 2012. "What Drives the Formation and Persistent Development of Territorial States since 1 AD?," MPRA Paper 42357, University Library of Munich, Germany.
  3. Ang, James B., 2013. "Are modern financial systems shaped by state antiquity?," Journal of Banking & Finance, Elsevier, vol. 37(11), pages 4038-4058.
  4. Krammer, Sorin, 2010. "Do good institutions enhance the effect of technological spillovers on productivity? Comparative evidence from developed and transition economies," MPRA Paper 53985, University Library of Munich, Germany, revised 07 Feb 2014.

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