IDEAS home Printed from https://ideas.repec.org/a/eee/jcecon/v42y2014i1p34-60.html
   My bibliography  Save this article

Do island states have better institutions?

Author

Listed:
  • Congdon Fors, Heather

Abstract

Since the end of World War II, the number of countries in the world has increased dramatically. Many of these newly independent countries are small both in terms of population and geography, and several are islands. The purpose of this paper is to explore the effects of island status and country size on institutional quality, and to determine if these institutional effects can explain the relatively strong economic performance of islands and small countries. I distinguish between political institutions (Democracy) and economic institutions (Rule of Law). One of the main findings of this paper is that the relationship between island status and institutional quality is significantly positive, and that these results are robust to the inclusion of a number of control variables. Further, I find that country size is negatively related to institutional quality, which is in keeping with previous results. These results provide further support for the hypothesis that institutions account for these countries’ relatively better economic performance.

Suggested Citation

  • Congdon Fors, Heather, 2014. "Do island states have better institutions?," Journal of Comparative Economics, Elsevier, vol. 42(1), pages 34-60.
  • Handle: RePEc:eee:jcecon:v:42:y:2014:i:1:p:34-60
    DOI: 10.1016/j.jce.2013.06.007
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0147596713000930
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.jce.2013.06.007?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Daron Acemoglu & Simon Johnson & James Robinson, 2005. "The Rise of Europe: Atlantic Trade, Institutional Change, and Economic Growth," American Economic Review, American Economic Association, vol. 95(3), pages 546-579, June.
    2. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 1999. "The Quality of Government," Journal of Law, Economics, and Organization, Oxford University Press, vol. 15(1), pages 222-279, April.
    3. Alesina, Alberto & Devleeschauwer, Arnaud & Easterly, William & Kurlat, Sergio & Wacziarg, Romain, 2003. "Fractionalization," Journal of Economic Growth, Springer, vol. 8(2), pages 155-194, June.
    4. 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, Oxford University Press, vol. 114(1), pages 83-116.
    5. Shang-Jin Wei, 2000. "Natural openness and good government," Policy Research Working Paper Series 2411, The World Bank.
    6. Alberto Alesina & Enrico Spolaore, 1997. "On the Number and Size of Nations," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1027-1056.
    7. Edward L. Glaeser & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2004. "Do Institutions Cause Growth?," Journal of Economic Growth, Springer, vol. 9(3), pages 271-303, September.
    8. 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.
    9. James Feyrer & Bruce Sacerdote, 2009. "Colonialism and Modern Income: Islands as Natural Experiments," The Review of Economics and Statistics, MIT Press, vol. 91(2), pages 245-262, May.
    10. Djankov, Simeon & Glaeser, Edward & La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei, 2003. "The new comparative economics," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 595-619, December.
    11. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2004. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," Journal of Economic Growth, Springer, vol. 9(2), pages 131-165, June.
    12. Atkinson, A B, 1997. "Bringing Income Distribution in from the Cold," Economic Journal, Royal Economic Society, vol. 107(441), pages 297-321, March.
    13. Stephen Knack & Philip Keefer, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1251-1288.
    14. Edward L. Glaeser & Andrei Shleifer, 2002. "Legal Origins," The Quarterly Journal of Economics, Oxford University Press, vol. 117(4), pages 1193-1229.
    15. Sachs, J-D & Warner, A-M, 1995. "Natural Resource Abundance and Economic Growth," Papers 517a, Harvard - Institute for International Development.
    16. Bockstette, Valerie & Chanda, Areendam & Putterman, Louis, 2002. "States and Markets: The Advantage of an Early Start," Journal of Economic Growth, Springer, vol. 7(4), pages 347-369, December.
    17. Srebrnik, Henry, 2004. "Small Island Nations and Democratic Values," World Development, Elsevier, vol. 32(2), pages 329-341, February.
    18. David Y. Albouy, 2012. "The Colonial Origins of Comparative Development: An Empirical Investigation: Comment," American Economic Review, American Economic Association, vol. 102(6), pages 3059-3076, October.
    19. William Easterly & Ross Levine, 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1203-1250.
    20. Easterly, William & Kraay, Aart, 2000. "Small States, Small Problems? Income, Growth, and Volatility in Small States," World Development, Elsevier, vol. 28(11), pages 2013-2027, November.
    21. Barro, Robert J, 1996. "Democracy and Growth," Journal of Economic Growth, Springer, vol. 1(1), pages 1-27, March.
    22. Grier, Robin M, 1999. "Colonial Legacies and Economic Growth," Public Choice, Springer, vol. 98(3-4), pages 317-335, March.
    23. Congdon Fors, Heather & Olsson, Ola, 2007. "Endogenous institutional change after independence," European Economic Review, Elsevier, vol. 51(8), pages 1896-1921, November.
    24. Gallup, John & Sachs, Jeffrey, 1999. "Geography and Economic Development," Harvard Institute for International Development (HIID) Papers 294434, Harvard University, Kennedy School of Government.
    25. 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.
    26. Bergh, Andreas & Nilsson, Therese, 2010. "Good for Living? On the Relationship between Globalization and Life Expectancy," World Development, Elsevier, vol. 38(9), pages 1191-1203, September.
    27. Alberto Alesina & Eliana La Ferrara, 2003. "Ethnic Diversity and Economic Performance," Harvard Institute of Economic Research Working Papers 2028, Harvard - Institute of Economic Research.
    28. Gallup, J.L. & Sachs, J.D. & Mullinger, A., 1999. "Geography and Economic Development," Papers 1, Chicago - Graduate School of Business.
    29. Harvey W. Armstrong & Robert Read, 2002. "The phantom of liberty?: economic growth and the vulnerability of small states," Journal of International Development, John Wiley & Sons, Ltd., vol. 14(4), pages 435-458.
    30. Pranab Bardhan, 2005. "Institutions matter, but which ones?," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 13(3), pages 499-532, July.
    31. Daron Acemoglu & Simon Johnson & James A. Robinson, 2002. "Reversal of Fortune: Geography and Institutions in the Making of the Modern World Income Distribution," The Quarterly Journal of Economics, Oxford University Press, vol. 117(4), pages 1231-1294.
    32. Alan Winters, L. & Martins, Pedro M. G., 2004. "When comparative advantage is not enough: business costs in small remote economies," World Trade Review, Cambridge University Press, vol. 3(3), pages 347-383, November.
    33. Alberto Alesina, 2002. "The Size of Countries: Does it Matter?," Harvard Institute of Economic Research Working Papers 1975, Harvard - Institute of Economic Research.
    34. Bergh, Andreas & Nilsson, Therese, 2010. "Do liberalization and globalization increase income inequality?," European Journal of Political Economy, Elsevier, vol. 26(4), pages 488-505, December.
    35. Easterly, William & Levine, Ross, 2003. "Tropics, germs, and crops: how endowments influence economic development," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 3-39, January.
    36. Lange, Matthew K., 2004. "British Colonial Legacies and Political Development," World Development, Elsevier, vol. 32(6), pages 905-922, June.
    37. Gregory N. Price, 2003. "Economic Growth in a Cross‐section of Nonindustrial Countries: Does Colonial Heritage Matter for Africa?," Review of Development Economics, Wiley Blackwell, vol. 7(3), pages 478-495, August.
    38. Stephen Knack & Omar Azfar, 2003. "Trade intensity, country size and corruption," Economics of Governance, Springer, vol. 4(1), pages 1-18, April.
    39. Bertocchi, Graziella & Canova, Fabio, 2002. "Did colonization matter for growth?: An empirical exploration into the historical causes of Africa's underdevelopment," European Economic Review, Elsevier, vol. 46(10), pages 1851-1871, December.
    40. John Luke Gallup & Jeffrey D. Sachs & Andrew Mellinger, 1999. "Geography and Economic Development," CID Working Papers 1, Center for International Development at Harvard University.
    41. Hariri, Jacob Gerner, 2012. "The Autocratic Legacy of Early Statehood," American Political Science Review, Cambridge University Press, vol. 106(3), pages 471-494, August.
    42. Briguglio, Lino, 1995. "Small island developing states and their economic vulnerabilities," World Development, Elsevier, vol. 23(9), pages 1615-1632, September.
    43. Nicholas Charron, 2009. "The Impact of Socio-Political Integration and Press Freedom on Corruption," Journal of Development Studies, Taylor & Francis Journals, vol. 45(9), pages 1472-1493.
    44. repec:hrv:faseco:30747160 is not listed on IDEAS
    45. Olsson, Ola, 2009. "On the democratic legacy of colonialism," Journal of Comparative Economics, Elsevier, vol. 37(4), pages 534-551, December.
    46. Federico Etro, 2006. "Political geography," Public Choice, Springer, vol. 127(3), pages 321-343, June.
    47. Alesina, Alberto & Wacziarg, Romain, 1998. "Openness, country size and government," Journal of Public Economics, Elsevier, vol. 69(3), pages 305-321, September.
    48. Armstrong, H W & Read, R, 2000. "Comparing the Economic Performance of Dependent Territories and Sovereign Microstates," Economic Development and Cultural Change, University of Chicago Press, vol. 48(2), pages 285-306, January.
    49. Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 681-712.
    50. Sachs, Jeffrey D & Warner, Andrew M, 1997. "Sources of Slow Growth in African Economies," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 6(3), pages 335-376, October.
    51. Hadenius,Axel, 1992. "Democracy and Development," Cambridge Books, Cambridge University Press, number 9780521416856.
    52. Sachs, Jeffrey D. & Warner, Andrew M., 2001. "The curse of natural resources," European Economic Review, Elsevier, vol. 45(4-6), pages 827-838, May.
    53. World Bank, 2010. "World Development Indicators 2010," World Bank Publications, The World Bank, number 4373, September.
    54. Maoz, Zeev & Russett, Bruce, 1993. "Normative and Structural Causes of Democratic Peace, 1946–1986," American Political Science Review, Cambridge University Press, vol. 87(3), pages 624-638, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sverker C. Jagers & Marina Povitkina & Martin Sjöstedt & Aksel Sundström, 2016. "Paradise Islands? Island States and Environmental Performance," Sustainability, MDPI, Open Access Journal, vol. 8(3), pages 1-24, March.
    2. Fabien Candau & Serge Rey, 2014. "International Trade in Outermost Europe: A Comparative Analysis of Mayotte Island and French Overseas Departments," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 11(1), pages 123-146, June.
    3. Gutmann, Jerg & Voigt, Stefan, 2018. "The rule of law: Measurement and deep roots," European Journal of Political Economy, Elsevier, vol. 54(C), pages 68-82.
    4. 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.
    5. Ryan H. Murphy, 2021. "Plausibly exogenous causes of economic freedom," Journal of Bioeconomics, Springer, vol. 23(1), pages 85-105, April.
    6. Solieva, Mastura, 2017. "Cognitive abilities and sustainable development: a global analysis," MPRA Paper 77055, University Library of Munich, Germany.
    7. Harvey W. Armstrong & Robert Read, 2020. "Size And Sectoral Specialisation: The Asymmetric Cross‐Country Impacts Of The 2008 Crisis And Its Aftermath," Journal of International Development, John Wiley & Sons, Ltd., vol. 32(6), pages 891-921, August.
    8. Gerrit Faber & Michiel Gerritse, 2017. "Does Institutional Change Spread Across Countries? Explaining Spatial Patterns in Human Rights," The World Economy, Wiley Blackwell, vol. 40(5), pages 906-930, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. Kyriacou, Andreas P., 2016. "Individualism–collectivism, governance and economic development," European Journal of Political Economy, Elsevier, vol. 42(C), pages 91-104.
    3. 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.
    4. Fenske, James, 2010. "Institutions in African history and development: A review essay," MPRA Paper 23120, University Library of Munich, Germany.
    5. Olsson, Ola, 2007. "On the Institutional Legacy of Mercantilist and Imperialist Colonialism," Working Papers in Economics 247, University of Gothenburg, Department of Economics.
    6. Quamrul Ashraf & Oded Galor, 2013. "The 'Out of Africa' Hypothesis, Human Genetic Diversity, and Comparative Economic Development," American Economic Review, American Economic Association, vol. 103(1), pages 1-46, February.
    7. Glawe, Linda & Wagner, Helmut, 2017. "The Deep Determinants of the Middle-Income Trap," CEAMeS Discussion Paper Series 10/2017, University of Hagen, Center for East Asia Macro-economic Studies (CEAMeS).
    8. Mauricio Cárdenas, 2007. "Economic Growth in Colombia : a reversal of "fortune"?," Revista ESPE - Ensayos sobre Política Económica, Banco de la Republica de Colombia, vol. 25(53), pages 220-259, January.
    9. Thorsten Beck & Luc Laeven, 2006. "Institution building and growth in transition economies," Journal of Economic Growth, Springer, vol. 11(2), pages 157-186, June.
    10. Lopez-Uribe, Maria del Pilar & Castells-Quintana, David & McDermott, Thomas K. J., 2017. "Geography, institutions and development: a review ofthe long-run impacts of climate change," LSE Research Online Documents on Economics 65147, London School of Economics and Political Science, LSE Library.
    11. Congdon Fors, Heather & Olsson, Ola, 2007. "Endogenous institutional change after independence," European Economic Review, Elsevier, vol. 51(8), pages 1896-1921, November.
    12. Bennett, Daniel L. & Faria, Hugo J. & Gwartney, James D. & Morales, Daniel R., 2017. "Economic Institutions and Comparative Economic Development: A Post-Colonial Perspective," World Development, Elsevier, vol. 96(C), pages 503-519.
    13. Jones, Patricia, 2013. "History matters: New evidence on the long run impact of colonial rule on institutions," Journal of Comparative Economics, Elsevier, vol. 41(1), pages 181-200.
    14. Olsson, Ola, 2009. "On the democratic legacy of colonialism," Journal of Comparative Economics, Elsevier, vol. 37(4), pages 534-551, December.
    15. Tobias D. Ketterer & Andrés Rodríguez‐Pose, 2018. "Institutions vs. ‘first‐nature’ geography: What drives economic growth in Europe's regions?," Papers in Regional Science, Wiley Blackwell, vol. 97(S1), pages 25-62, March.
    16. Natkhov, T. & Polishchuk, L., 2017. "Political Economy of Institutions and Development: The Importance of Being Inclusive. Reflection on "Why Nations Fail" by D. Acemoglu and J. Robinson. Part I. Institutions and Economic Devel," Journal of the New Economic Association, New Economic Association, vol. 34(2), pages 12-38.
    17. David Castells-Quintana & Maria del Pilar Lopez-Uribe & Tom McDermott, 2015. "Climate change and the geographical and institutional drivers of economic development," GRI Working Papers 198, Grantham Research Institute on Climate Change and the Environment.
    18. P. Dorian Owen, 2017. "Evaluating Ingenious Instruments for Fundamental Determinants of Long-Run Economic Growth and Development," Econometrics, MDPI, Open Access Journal, vol. 5(3), pages 1-33, September.
    19. Licht, Amir N. & Goldschmidt, Chanan & Schwartz, Shalom H., 2007. "Culture rules: The foundations of the rule of law and other norms of governance," Journal of Comparative Economics, Elsevier, vol. 35(4), pages 659-688, December.
    20. Ignacio Amate-Fortes & Almudena Guarnido-Rueda & Agustin Molina-Morales, 2017. "Economic and Social Determinants of Human Development: A New Perspective," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 133(2), pages 561-577, September.

    More about this item

    Keywords

    Democracy; Rule of law; Islands; Country size; Comparative economics; Colonialism;
    All these keywords.

    JEL classification:

    • N40 - Economic History - - Government, War, Law, International Relations, and Regulation - - - General, International, or Comparative
    • P50 - Economic Systems - - Comparative Economic Systems - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jcecon:v:42:y:2014:i:1:p:34-60. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.elsevier.com/locate/inca/622864 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/622864 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.