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Geography vs. institutions at the village level

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  • Grimm, Michael
  • Klasen, Stephan

Abstract

There is a well-known debate about the roles of geography versus institutions in explaining the long-term development of countries. These debates have usually been based on cross-country regressions where questions about parameter heterogeneity, unobserved heterogeneity, and endogeneity cannot easily be controlled for. The innovation of Acemoglu, Johnson and Robinson (2001) was to address this last point by using settler mortality as an instrument for geography-induced endogenous institutions and found that this supported their line of reasoning. We believe there is value-added to consider this debate at the micro level within a country as particularly questions of parameter heterogeneity and unobserved heterogeneity are likely to be smaller than between countries. Moreover, at the micro level it is possible to identify more precise transmission mechanisms from geography via institutions to economic development outcomes. In particular, we examine the determinants of economic development across villages on the Indonesian Island of Sulawesi and find that geography-induced endogenous emergence of land rights is the critical institutional link between geographic conditions and technological change. We therefore highlight and empirically validate a new transmission channel from endogenously generated institutions on economic development. --

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Bibliographic Info

Paper provided by University of Goettingen, Department of Economics in its series Center for European, Governance and Economic Development Research Discussion Papers with number 70.

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Date of creation: 2008
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Handle: RePEc:zbw:cegedp:70

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Postal: Platz der Göttinger Sieben 3, 37073 Göttingen
Web page: http://www.cege.wiso.uni-goettingen.de/
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Keywords: Geography; migration; land rights; institutions; technology adoption; agricultural development; Indonesia;

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References

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  1. Ravallion, Martin & Datt, Gaurav, 2002. "Why has economic growth been more pro-poor in some states of India than others?," Journal of Development Economics, Elsevier, vol. 68(2), pages 381-400, August.
  2. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
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  7. Binswanger, Hans P. & Deininger, Klaus & Feder, Gershon, 1993. "Power, distortions, revolt, and reform in agricultural land relations," Policy Research Working Paper Series 1164, The World Bank.
  8. Stephan Klasen & Thorsten Nestmann, 2004. "Population, Population Density, and Technological Change," Ibero America Institute for Econ. Research (IAI) Discussion Papers 100, Ibero-America Institute for Economic Research.
  9. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output Per Worker Than Others?," The Quarterly Journal of Economics, MIT Press, vol. 114(1), pages 83-116, February.
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  11. Mundlack, Yair & Larson, Donald F. & Butzer, Rita, 2002. "Determinants of agricultural growth in Indonesia, the Philippines, and Thailand," Policy Research Working Paper Series 2803, The World Bank.
  12. John Luke Gallup & Jeffrey D. Sachs & Andrew D. Mellinger, 1998. "Geography and Economic Development," Harvard Institute of Economic Research Working Papers 1856, Harvard - Institute of Economic Research.
  13. Klasen, Stephan, 2007. "Determinants of pro-poor growth:," 2020 vision briefs BB09 Special Edition, International Food Policy Research Institute (IFPRI).
  14. Hanan G. Jacoby & Bart Minten, 2007. "Is Land Titling in Sub-Saharan Africa Cost-Effective? Evidence from Madagascar," World Bank Economic Review, World Bank Group, vol. 21(3), pages 461-485, June.
  15. Butzer, Rita & Larson, Donald F. & Mundlak, Yair, 2002. "Determinants Of Agricultural Growth In Thailand, Indonesia And The Philippines," Discussion Papers 14979, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
  16. Miet Maertens & Manfred Zeller & Regina Birner, 2006. "Sustainable agricultural intensification in forest frontier areas," Agricultural Economics, International Association of Agricultural Economists, vol. 34(2), pages 197-206, 03.
  17. William Easterly & Ross Levine, 2002. "Tropics, Germs, and Crops: How Endowments Influence Economic Development," NBER Working Papers 9106, National Bureau of Economic Research, Inc.
  18. John Luke Gallup & Jeffrey D. Sachs & Andrew D. Mellinger, 1998. "Geography and Economic Development," NBER Working Papers 6849, National Bureau of Economic Research, Inc.
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  21. Rozelle, Scott & Li, Guo, 1998. "Village Leaders and Land-Rights Formation in China," American Economic Review, American Economic Association, vol. 88(2), pages 433-38, May.
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Cited by:
  1. Margaret S. McMillan & William A. Masters & Harounan Kazianga, 2011. "Rural Demography, Public Services and Land Rights in Africa: A Village-Level Analysis in Burkina Faso," NBER Working Papers 17718, National Bureau of Economic Research, Inc.
  2. Stephan Klasen & Jan Priebe & Robert Rudolf, 2010. "Cash Crop Choice and Income Dynamics in Rural Areas: Evidence for Post-Crisis Indonesia," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 33, Courant Research Centre PEG.

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