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Geography Rules Too! Economic Development and the Geography of Institutions

  • Maarten Bosker
  • Harry Garretsen

To explain cross-country income differences, research has recently focused on the so-called deep determinants of economic development, notably institutions and geography. This paper sheds a different light on these determinants. We use spatial econometrics to analyse the importance of the geography of institutions. We show that it is not only absolute geography, in terms of for instance climate, but also relative geography, the spatial linkages between countries, that matters for a country’s gdp per capita. Apart from a country’s own institutions, institutions in neighboring countries turn out to be relevant as well. This finding is robust to various alternative specifications.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1769.

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Date of creation: 2006
Date of revision:
Handle: RePEc:ces:ceswps:_1769
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  1. Rodrik, Dani & Subramanian, Arvind & Trebbi, Francesco, 2002. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," CEPR Discussion Papers 3643, C.E.P.R. Discussion Papers.
  2. 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.
  3. Stephen Redding & Anthony J. Venables, 2001. "Economic Geography and International Inequality," CEP Discussion Papers dp0495, Centre for Economic Performance, LSE.
  4. repec:oup:qjecon:v:119:y:2004:i:2:p:612-645 is not listed on IDEAS
  5. Edward L. Glaeser & Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer, 2004. "Do Institutions Cause Growth?," NBER Working Papers 10568, National Bureau of Economic Research, Inc.
  6. Nicholas Crafts & Tony Venables, 2002. "Globalization in history: a geographical perspective," LSE Research Online Documents on Economics 2135, London School of Economics and Political Science, LSE Library.
  7. Jeffrey D. Sachs, 2003. "Institutions Don't Rule: Direct Effects of Geography on Per Capita Income," NBER Working Papers 9490, National Bureau of Economic Research, Inc.
  8. 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, MIT Press, vol. 114(1), pages 83-116, February.
  9. repec:oup:qjecon:v:114:y:1999:i:1:p:83-116 is not listed on IDEAS
  10. Ades, Alberto & Chua, Hak B, 1997. " Thy Neighbor's Curse: Regional Instability and Economic Growth," Journal of Economic Growth, Springer, vol. 2(3), pages 279-304, September.
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