National Institutions and Subnational Development in Africa

We investigate the role of national institutions on subnational African development in a novel framework that accounts for both local geography and cultural-genetic traits. We exploit the fact that the political boundaries on the eve of African independence partitioned more than 200 ethnic groups across adjacent countries subjecting similar cultures, residing in homogeneous geographic areas, to different formal institutions. Using both a matching type and a spatial regression discontinuity approach we show that differences in countrywide institutional structures across the national border do not explain within-ethnicity differences in economic performance, as captured by satellite images of light density. The average noneffect of national institutions on ethnic development masks considerable heterogeneity partially driven by the diminishing role of national institutions in areas further from the capital cities. JEL Codes: O10, O40, O43, N17, Z10. Copyright 2014, Oxford University Press.