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Institutions and the long-run impact of early development

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  • Ang, James B.

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 1500AD 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.

Suggested Citation

  • Ang, James B., 2013. "Institutions and the long-run impact of early development," Journal of Development Economics, Elsevier, vol. 105(C), pages 1-18.
  • Handle: RePEc:eee:deveco:v:105:y:2013:i:c:p:1-18
    DOI: 10.1016/j.jdeveco.2013.06.002
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    1. Cinnirella, Francesco & Hornung, Erik, 2016. "Landownership concentration and the expansion of education," Journal of Development Economics, Elsevier, vol. 121(C), pages 135-152.
    2. repec:bla:ecorec:v:92:y:2016:i:299:p:568-589 is not listed on IDEAS
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    5. Bleaney, Michael & Dimico, Arcangelo, 2016. "State history, historical legitimacy and modern ethnic diversity," European Journal of Political Economy, Elsevier, vol. 43(C), pages 159-170.
    6. Sam Hak Kan Tang & Charles Ka Yui Leung, 2016. "The Deep Historical Roots of Macroeconomic Volatility," The Economic Record, The Economic Society of Australia, vol. 92(299), pages 568-589, December.
    7. Oana Borcan & Ola Olsson & Louis Putterman, 2018. "State history and economic development: evidence from six millennia," Journal of Economic Growth, Springer, vol. 23(1), pages 1-40, March.
    8. Braunfels, Elias, 2016. "Further Unbundling Institutions," Discussion Paper Series in Economics 13/2016, Norwegian School of Economics, Department of Economics.
    9. repec:eee:jcecon:v:45:y:2017:i:3:p:644-657 is not listed on IDEAS
    10. Daniel L. Bennett & Hugo J. Faria & James D. Gwartney & Daniel R. Morales, 2016. "Economic Institutions and Comparative Economic Development: A Post-Colonial Perspective," Working Papers 2016-07, University of Miami, Department of Economics.
    11. repec:bla:ecinqu:v:55:y:2017:i:3:p:1511-1537 is not listed on IDEAS
    12. James, Ang, 2012. "What Drives the Formation and Persistent Development of Territorial States since 1 AD?," MPRA Paper 42357, University Library of Munich, Germany.
    13. repec:kap:pubcho:v:174:y:2018:i:3:d:10.1007_s11127-018-0509-5 is not listed on IDEAS
    14. James B. Ang & Per G. Fredriksson, 2017. "Statehood Experience, Legal Traditions, And Climate Change Policies," Economic Inquiry, Western Economic Association International, vol. 55(3), pages 1511-1537, July.
    15. Ang, James B., 2013. "Are modern financial systems shaped by state antiquity?," Journal of Banking & Finance, Elsevier, vol. 37(11), pages 4038-4058.
    16. Krammer, Sorin M.S., 2015. "Do good institutions enhance the effect of technological spillovers on productivity? Comparative evidence from developed and transition economies," Technological Forecasting and Social Change, Elsevier, vol. 94(C), pages 133-154.
    17. Jerg Gutmann & Stefan Voigt, 2015. "The Rule of Law: Measurement and Deep Roots," CESifo Working Paper Series 5670, CESifo Group Munich.
    18. Daniel L. Bennett & Hugo J. Faria & James D. Gwartney & Hugo M. Montesinos-Yufa & Daniel R. Morales & Carlos E. Navarro, 2017. "Evidence on economic versus political institutions as determinants of development," Working Papers 2017-04, University of Miami, Department of Economics.
    19. repec:kap:itaxpf:v:24:y:2017:i:6:d:10.1007_s10797-016-9406-3 is not listed on IDEAS
    20. Faria, Hugo J. & Montesinos-Yufa, Hugo M. & Morales, Daniel R. & Navarro, Carlos E., 2016. "Unbundling the roles of human capital and institutions in economic development," European Journal of Political Economy, Elsevier, vol. 45(S), pages 108-128.
    21. Ertan, Arhan & Fiszbein, Martin & Putterman, Louis, 2016. "Who was colonized and when? A cross-country analysis of determinants," European Economic Review, Elsevier, vol. 83(C), pages 165-184.
    22. 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.

    More about this item

    Keywords

    Institutions; Long-run comparative development; Technology adoption;

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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