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Country size and the rule of law: Resuscitating Montesquieu

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  • Olsson, Ola
  • Hansson, Gustav

Abstract

In this paper, we demonstrate 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 outline a framework featuring 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 core of the country to the hinterland, and secondly that a large territory usually is accompanied by valuable rents and a lack of openness that both tend to distort property rights institutions. Our empirical analysis further shows some evidence 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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  • Olsson, Ola & Hansson, Gustav, 2011. "Country size and the rule of law: Resuscitating Montesquieu," European Economic Review, Elsevier, vol. 55(5), pages 613-629, June.
  • Handle: RePEc:eee:eecrev:v:55:y:2011:i:5:p:613-629
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    Cited by:

    1. Andreas P. Kyriacou & Leonel Muinelo-Gallo & Oriol Roca-Sagalés, 2018. "The efficiency of transport infrastructure investment and the role of institutions: an empirical analysis," Working Papers. Collection B: Regional and sectoral economics 1802, Universidade de Vigo, GEN - Governance and Economics research Network.
    2. Ahlerup, Pelle & Hansson, Gustav, 2011. "Nationalism and government effectiveness," Journal of Comparative Economics, Elsevier, vol. 39(3), pages 431-451, September.
    3. Michalopoulos, Stelios & Papaioannou, Elias, 2010. "Divide and Rule or the Rule of the Divided? Evidence from Africa," CEPR Discussion Papers 8088, C.E.P.R. Discussion Papers.
    4. Congdon Fors, Heather, 2014. "Do island states have better institutions?," Journal of Comparative Economics, Elsevier, vol. 42(1), pages 34-60.
    5. Tuan-Hwee Sng & Chiaki Moriguchi, 2014. "Asia’s little divergence: state capacity in China and Japan before 1850," Journal of Economic Growth, Springer, vol. 19(4), pages 439-470, December.
    6. Ko, Chiu Yu & Koyama, Mark & Sng, Tuan-Hwee, 2014. "Unified China; Divided Europe," MPRA Paper 60418, University Library of Munich, Germany.
    7. Blanco Luisa R. & Rogers Cynthia L., 2012. "Do Tax Havens Really Flourish?," Global Economy Journal, De Gruyter, vol. 12(3), pages 1-23, September.
    8. Nicholas Charron & José Fernández-Albertos & Victor Lapuente, 2013. "Small is different: size, political representation and governance," Chapters,in: The Challenge of Local Government Size, chapter 3, pages 55-82 Edward Elgar Publishing.
    9. Nicholas Charron & José Fernández-Albertos & Victor Lapuente, 2012. "Small is Different Size, Political Representation and Governance," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1220, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    10. Manitra Rakotoarisoa, "undated". "Explaining Durations in Country Investment Ratings: A Competing Risk Model with Random-Effects," EcoMod2007 23900074, EcoMod.
    11. Pieretti, Patrice & Thisse, Jacques-François & Zanaj, Skerdilajda, 2011. "Tax havens or safe havens," CEPR Discussion Papers 8570, C.E.P.R. Discussion Papers.
    12. repec:eee:reveco:v:51:y:2017:i:c:p:19-35 is not listed on IDEAS
    13. Dalgaard, Carl-Johan & Olsson, Ola, 2007. "Why Are Market Economies Politically Stable? A Theory of Capitalist Cohesion," Working Papers in Economics 280, University of Gothenburg, Department of Economics.
    14. Roberto Ezcurra & Andr Rodríguez-Pose, 2014. "Government quality and spatial inequality: a cross-country analysis," Environment and Planning A, Pion Ltd, London, vol. 46(7), pages 1732-1753, July.
    15. Sng, Tuan-Hwee & Moriguchi, Chiaki, 2013. "Taxation and Public Goods Provision in China and Japan before 1850," PRIMCED Discussion Paper Series 35, Institute of Economic Research, Hitotsubashi University.
    16. Congdon Fors, Heather, 2007. "Island Status, Country Size and Institutional Quality in Former Colonies," Working Papers in Economics 257, University of Gothenburg, Department of Economics.
    17. Nadezhda V. Baryshnikova & Ngoc T.A. Pham & Maria M. Wihardja, 2016. "Does Political and Economic Inequality Affect Institutional Quality?," The Economic Record, The Economic Society of Australia, vol. 92(297), pages 190-208, June.
    18. Kyriacou, Andreas P., 2016. "Individualism–collectivism, governance and economic development," European Journal of Political Economy, Elsevier, vol. 42(C), pages 91-104.
    19. Olsson, Ola & Hansson, Gustav, 2011. "Country size and the rule of law: Resuscitating Montesquieu," European Economic Review, Elsevier, vol. 55(5), pages 613-629, June.
    20. Jerg Gutmann & Stefan Voigt, 2015. "The Rule of Law: Measurement and Deep Roots," CESifo Working Paper Series 5670, CESifo Group Munich.
    21. Sng, Tuan-Hwee, 2014. "Size and dynastic decline: The principal-agent problem in late imperial China, 1700–1850," Explorations in Economic History, Elsevier, vol. 54(C), pages 107-127.
    22. Jimenez-Ayora, Pablo & Ulubaşoğlu, Mehmet Ali, 2015. "What underlies weak states? The role of terrain ruggedness," European Journal of Political Economy, Elsevier, vol. 39(C), pages 167-183.
    23. Olsson, Ola, 2007. "On the Institutional Legacy of Mercantilist and Imperialist Colonialism," Working Papers in Economics 247, University of Gothenburg, Department of Economics.

    More about this item

    Keywords

    Country size Rule of law Institutions Development Montesquieu;

    JEL classification:

    • N40 - Economic History - - Government, War, Law, International Relations, 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 Trade, Finance, Investment, Relations, and Aid

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