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A Superior Instrument for the Role of Institutional Quality on Economic Development

This paper reexamines the causal link between institutional quality and economic development using "Malaria Endemicity" as an instrument for institutions. This instrument is superior to the previously used instruments in the literature which suffered from measurement error, including "settler mortality." Because the Malaria Endemicity measure captures the malaria environment before the discovery that mosquitoes transmit the disease and before the successful eradication efforts that followed, it is exogenous to both institutional quality and economic development. We find Malaria Endemicity a valid strong instrument which yields larger significant effects of institutions on economic development than those obtained in the previous literature.

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File URL: http://icepp.gsu.edu/files/2016/11/icepp1610.pdf
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Paper provided by International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University in its series International Center for Public Policy Working Paper Series, at AYSPS, GSU with number paper1610.

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Length: 35 pages
Date of creation: Oct 2016
Handle: RePEc:ays:ispwps:paper1610
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Web page: http://aysps.gsu.edu/isp/index.html

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  1. Nathan Nunn & Diego Puga, 2012. "Ruggedness: The Blessing of Bad Geography in Africa," The Review of Economics and Statistics, MIT Press, vol. 94(1), pages 20-36, February.
  2. 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, 06.
  3. Gordon C. McCord & Jeffrey D. Sachs, 2013. "Development, Structure, and Transformation: Some Evidence on Comparative Economic Growth," NBER Working Papers 19512, National Bureau of Economic Research, Inc.
  4. Knack, Stephen & Keefer, Philip, 1995. "Institutions and Economic Performance: Cross-Country Tests Using Alternative Institutional Indicators," MPRA Paper 23118, University Library of Munich, Germany.
  5. Stephen Knack & Philip Keefer, 1995. "Institutions And Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economics and Politics, Wiley Blackwell, vol. 7(3), pages 207-227, November.
  6. John W. McArthur & Jeffrey D. Sachs, 2001. "Institutions and Geography: Comment on Acemoglu, Johnson and Robinson (2000)," NBER Working Papers 8114, National Bureau of Economic Research, Inc.
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