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Initial Conditions, Institutional Dynamics and Economic Performance: Evidence from the American States

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  • Daniel Berkowitz

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  • Karen Clay

    ()

Abstract

Using state-level data from the United States, we find that differences in colonial legal institutions affect the current quality of state legal institutions. These differences in colonial legal institutions arose because some states were settled by Great Britain, a common law country, and other states were settled by France, Spain, and Mexico, all civil law countries. To explain these findings, we develop a transplant-civil law hypothesis that highlights the disruption associated with large-scale legal transplantation and the possible relative inefficiencies of colonial civil law. We find strong support for the transplant-civil law hypothesis. Our results are robust to inclusion of additional variables capturing climate, geography, initial population and resource endowments. Given the 150-200 year gap between the initial conditions and the measures of the current quality of legal institutions, we provide indirect evidence on the persistence of legal institutions. We then use initial legal systems and climate to quantify the substantial impact of current institutions on current economic performance.

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Bibliographic Info

Paper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number 2003-615.

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Length: 62 pages
Date of creation: 01 Sep 2003
Date of revision:
Handle: RePEc:wdi:papers:2003-615

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Keywords: common law; civil law; transplant; initial conditions; state courts and public corruption;

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References

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Citations

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Cited by:
  1. Noel Maurer & Lakshmi Iyer, 2008. "The Cost of Property Rights: Establishing Institutions on the Philippine Frontier Under American Rule, 1898-1918," NBER Working Papers 14298, National Bureau of Economic Research, Inc.
  2. Joana Naritomi & Rodrigo R. Soares & Juliano J. Assunção, 2007. "Rent Seeking and the Unveiling of 'De Facto' Institutions: Development and Colonial Heritage within Brazil," NBER Working Papers 13545, National Bureau of Economic Research, Inc.
  3. Efraim Benmelech & Tobias J. Moskowitz, 2007. "The Political Economy of Financial Regulation: Evidence from U.S. State Usury Laws in the 19th Century," NBER Working Papers 12851, National Bureau of Economic Research, Inc.
  4. Edward L. Glaeser & Raven Saks, 2004. "Corruption in America," NBER Working Papers 10821, National Bureau of Economic Research, Inc.
  5. Naritomi, Joana & Soares, Rodrigo R. & Assunção, Juliano J., 2012. "Institutional Development and Colonial Heritage within Brazil," The Journal of Economic History, Cambridge University Press, Cambridge University Press, vol. 72(02), pages 393-422, June.
  6. Andres Rosas & Juan Mendoza, 2004. "The economic effects of geography Colombia as a case study," DOCUMENTOS DE ECONOMÍA 003584, UNIVERSIDAD JAVERIANA - BOGOTÁ.
  7. Luciano Nakabashi & Ana Elisa Gonçalves Pereira & Adolfo Sachsida, 2013. "Institutions and growth: a developing country case study," Journal of Economic Studies, Emerald Group Publishing, Emerald Group Publishing, vol. 40(5), pages 614 - 634, September.
  8. Lagerlöf, Nils-Petter & Basher, Syed A., 2005. "Geography, population density, and per-capita income gaps across US states and Canadian provinces," MPRA Paper 369, University Library of Munich, Germany, revised 28 Sep 2006.

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