On Trade Openness, Institutional Change and Economic Growth
This paper explores the relationship between trade openness and economic growth through a change in institutions. To do so, the paper creates a theory of endogenous institutional change wherethere are three social groups, each one owns a speci c production factor. An ellite (landowners) controlling the political power x higher taxes to extract rents from the other groups of the society(capitalists). This reduces investment in capital, the source for endogenous growth. Endogenous institutional change is done by allowing the rival group (capitalists) to invest in a military action which expels out the group in power. The model studies optimal taxation, growth and institutional change under two scenarios, autarky and free trade.We calibrate the model according to Western European experience on the XVIth century deriving that: First: Economies opened to trade will experiment higher growth and faster institutionalchange. Second: Economies specializing in manufacturing products tend to grow more and rise the institutional change earlier. These results are very robust to change in parameter values and it seems to t quite well with historical experience.
|Date of creation:||02 Oct 2008|
|Note:||View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00326394|
|Contact details of provider:|| Web page: https://hal.archives-ouvertes.fr/|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Matthias Doepke & Fabrizio Zilibotti, 2005. "Social Class and the Spirit of Capitalism," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 516-524, 04/05.
- Josef Falkinger & Volker Grossmann, 2004.
"Institutions and Development: The Interaction between Trade Regime and Political System,"
CESifo Working Paper Series
1279, CESifo Group Munich.
- Josef Falkinger & Volker Grossmann, 2005. "Institutions and Development: The Interaction Between Trade Regime and Political System," Journal of Economic Growth, Springer, vol. 10(3), pages 231-272, 09.
- Falkinger, Josef & Grossmann, Volker, 2004. "Institutions and Development: The Interaction between Trade Regime and Political System," IZA Discussion Papers 1242, Institute for the Study of Labor (IZA).
- Edward C. Prescott & Stephen L. Parente, 1999.
"Monopoly Rights: A Barrier to Riches,"
American Economic Review,
American Economic Association, vol. 89(5), pages 1216-1233, December.
- Oded Galor & Omer Moav & Dietrich Vollrath, 2005. "Land Inequality and the Emergence of Human Capital Promoting Institutions," Development and Comp Systems 0502018, EconWPA.
- 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.
- Rubén Segura-Cayuela, 2006.
"Inefficient policies, inefficient institutions and trade,"
0633, Banco de España;Working Papers Homepage.
- Ruben Segura-Cayuela, 2006. "Inefficient Policies, Inefficient Institutions and Trade," 2006 Meeting Papers 502, Society for Economic Dynamics.
- O Rourke, Kevin H. & Williamson, Jeffrey G., 2002.
"When did globalisation begin?,"
European Review of Economic History,
Cambridge University Press, vol. 6(01), pages 23-50, April.
- Luis A. Rivera-Batiz & Paul M. Romer, 1991.
"Economic Integration and Endogenous Growth,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 106(2), pages 531-555.
- Glaeser, Edward L. & La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei, 2004.
"Do Institutions Cause Growth?,"
27867242, Harvard University Department of Economics.
- Keefer, Philip & Knack, Stephen, 1997. "Why Don't Poor Countries Catch Up? A Cross-National Test of Institutional Explanation," Economic Inquiry, Western Economic Association International, vol. 35(3), pages 590-602, July.
- Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output per Worker than Others?," NBER Working Papers 6564, National Bureau of Economic Research, Inc.
- Gonzalez, Francisco M., 2007. "Effective property rights, conflict and growth," Journal of Economic Theory, Elsevier, vol. 137(1), pages 127-139, November.
When requesting a correction, please mention this item's handle: RePEc:hal:wpaper:halshs-00326394. 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: (CCSD)
If references are entirely missing, you can add them using this form.