IDEAS home Printed from https://ideas.repec.org/p/hir/idecdp/2-3.html

Spatial Spillover of Governance and Institutional Quality: A Spatial Econometric Approach

Author

Listed:
  • Hossein Mirshojaeian Hosseini

    (Graduate School for International Development and Cooperation, Hiroshima University)

  • Shinji Kaneko

    (Graduate School for International Development and Cooperation, Hiroshima University)

Abstract

The failure of Washington consensus increased the attention of researchers and policymakers on improving institutional quality of countries. Different empirical studies have been done to find determinants of institutional quality especially at global scales. This paper represents a complementary approach on previous efforts by developing spatial spillover of governance as a determinant of institutional quality. In fact, this paper attempts to answer to the question: how much can the institutional quality of neighboring countries explain good governance of a country and what is the share of this variable among the other determinants? To answer these questions, spatial econometric approach is adopted. Paper reveals that spatial governance spillover can explain about 20% of governance quality of countries and consequently is one of the serous determinants of institutional quality when the concept of contiguity gets wider than land borders.

Suggested Citation

  • Hossein Mirshojaeian Hosseini & Shinji Kaneko, 2012. "Spatial Spillover of Governance and Institutional Quality: A Spatial Econometric Approach," IDEC DP2 Series 2-3, Hiroshima University, Graduate School for International Development and Cooperation (IDEC).
    • Handle: RePEc:hir:idecdp:2-3
    as

    Download full text from publisher

    File URL: http://ir.lib.hiroshima-u.ac.jp/files/public/32033/20141016185026786880/IDEC-DP2_02-3.pdf
    File Function: First version, 2012
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Daniel Kaufmann & Aart Kraay, 2008. "Governance Indicators: Where Are We, Where Should We Be Going?," The World Bank Research Observer, World Bank, vol. 23(1), pages 1-30, January.
    2. Shang-Jin Wei, 2000. "Natural openness and good government," Policy Research Working Paper Series 2411, The World Bank.
    3. Ola Olsson, 2005. "Geography and institutions: Plausible and implausible linkages," Journal of Economics, Springer, vol. 10(1), pages 167-194, December.
    4. Barry Eichengreen & David Leblang, 2008. "Democracy And Globalization," Economics and Politics, Wiley Blackwell, vol. 20(3), pages 289-334, November.
    5. 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.
    6. Daniel Kaufmann & Aart Kraay & Massimo Mastruzzi, 2004. "Governance Matters III: Governance Indicators for 1996, 1998, 2000, and 2002," The World Bank Economic Review, World Bank, vol. 18(2), pages 253-287.
    7. Stanley L. Engerman & Kenneth Lee Sokoloff, 2002. "Factor Endowments, Inequality, and Paths of Development Among New World Economies," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2002), pages 41-110.
    8. Sachs, J-D & Warner, A-M, 1995. "Natural Resource Abundance and Economic Growth," Papers 517a, Harvard - Institute for International Development.
    9. Siba, Eyerusalem G., 2008. "Determinants of Institutional Quality in Sub-Saharan African Countries," Working Papers in Economics 310, University of Gothenburg, Department of Economics.
    10. Olsson, Ola & Hibbs, Douglas Jr., 2005. "Biogeography and long-run economic development," European Economic Review, Elsevier, vol. 49(4), pages 909-938, May.
    11. Rauch, James E. & Evans, Peter B., 2000. "Bureaucratic structure and bureaucratic performance in less developed countries," Journal of Public Economics, Elsevier, vol. 75(1), pages 49-71, January.
    12. Fisman, Raymond & Gatti, Roberta, 2002. "Decentralization and corruption: evidence across countries," Journal of Public Economics, Elsevier, vol. 83(3), pages 325-345, March.
    13. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1998. "Law and Finance," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1113-1155, December.
    14. Brunnschweiler, Christa N. & Bulte, Erwin H., 2008. "The resource curse revisited and revised: A tale of paradoxes and red herrings," Journal of Environmental Economics and Management, Elsevier, vol. 55(3), pages 248-264, May.
    15. Brunnschweiler, Christa N., 2008. "Cursing the Blessings? Natural Resource Abundance, Institutions, and Economic Growth," World Development, Elsevier, vol. 36(3), pages 399-419, March.
    16. 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.
    17. Stevens, Paul & Dietsche, Evelyn, 2008. "Resource curse: An analysis of causes, experiences and possible ways forward," Energy Policy, Elsevier, vol. 36(1), pages 56-65, January.
    18. repec:wvu:wpaper:06-04 is not listed on IDEAS
    19. Straub, Stéphane, 2000. "Empirical Determinants of Good Institutions: Do We Know Anything?," IDB Publications (Working Papers) 6085, Inter-American Development Bank.
    20. Olsson, Ola, 2003. "Geography and Institutions: A Review of Plausible and Implausible Linkages," Working Papers in Economics 106, University of Gothenburg, Department of Economics.
    21. Mary M. Shirley, 2008. "Institutions and Development," Books, Edward Elgar Publishing, number 12524.
    22. José Antonio Alonso & Carlos Garcimartín, 2013. "The Determinants Of Institutional Quality. More On The Debate," Journal of International Development, John Wiley & Sons, Ltd., vol. 25(2), pages 206-226, March.
    23. Mary M. Shirley, 2008. "Institutions and Development," Springer Books, in: Claude Ménard & Mary M. Shirley (ed.), Handbook of New Institutional Economics, chapter 24, pages 611-638, Springer.
    24. Stephen Knack & Omar Azfar, 2003. "Trade intensity, country size and corruption," Economics of Governance, Springer, vol. 4(1), pages 1-18, April.
    25. Peter T. Leeson & Andrea M. Dean, 2009. "The Democratic Domino Theory: An Empirical Investigation," American Journal of Political Science, John Wiley & Sons, vol. 53(3), pages 533-551, July.
    26. Gradstein, Mark, 2002. "Governance and Growth," CEPR Discussion Papers 3270, C.E.P.R. Discussion Papers.
    27. R. H. Coase, 2013. "The Problem of Social Cost," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 837-877.
    28. Alesina, Alberto & Perotti, Roberto, 1996. "Income distribution, political instability, and investment," European Economic Review, Elsevier, vol. 40(6), pages 1203-1228, June.
    29. Kaufmann, Daniel & Kraay, Aart & Mastruzzi, Massimo, 2008. "Governance matters VII : aggregate and individual governance indicators 1996-2007," Policy Research Working Paper Series 4654, The World Bank.
    30. Dubin, Robin A., 1998. "Spatial Autocorrelation: A Primer," Journal of Housing Economics, Elsevier, vol. 7(4), pages 304-327, December.
    31. Sunde, Uwe & Cervellati, Matteo & Fortunato, Piergiuseppe, 2008. "Are all democracies equally good? The role of interactions between political environment and inequality for rule of law," Economics Letters, Elsevier, vol. 99(3), pages 552-556, June.
    32. Joshua Hall & Robert Lawson, 2009. "Economic Freedom and Peace," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 37(4), pages 445-446, December.
    33. LeSage, James P., 1997. "Regression Analysis of Spatial Data," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 27(2), pages 1-12.
    34. Berkowitz, Daniel & Pistor, Katharina & Richard, Jean-Francois, 2003. "Economic development, legality, and the transplant effect," European Economic Review, Elsevier, vol. 47(1), pages 165-195, February.
    35. Joseph Stiglitz, 2003. "Globalization and the economic role of the state in the new millennium," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 12(1), pages 3-26, February.
    36. Hooper, Vince & Sim, Ah Boon & Uppal, Asfandyar, 2009. "Governance and stock market performance," Economic Systems, Elsevier, vol. 33(2), pages 93-116, June.
    37. Bulte, Erwin H. & Damania, Richard & Deacon, Robert T., 2005. "Resource intensity, institutions, and development," World Development, Elsevier, vol. 33(7), pages 1029-1044, July.
    38. Francine Mestrum, 2006. "Global Poverty Reduction: A new social paradigm?," Development, Palgrave Macmillan;Society for International Deveopment, vol. 49(2), pages 62-66, June.
    39. Gradstein, Mark, 2004. "Governance and growth," Journal of Development Economics, Elsevier, vol. 73(2), pages 505-518, April.
    40. Simmons, Beth A. & Dobbin, Frank & Garrett, Geoffrey, 2006. "Introduction: The International Diffusion of Liberalism," International Organization, Cambridge University Press, vol. 60(4), pages 781-810, October.
    41. Dasgupta, Susmita & Hamilton, Kirk & Pandey, Kiran D. & Wheeler, David, 2006. "Environment During growth: Accounting for governance and vulnerability," World Development, Elsevier, vol. 34(9), pages 1597-1611, September.
    42. Islam, Roumeen & Montenegro, Claudio E., 2002. "What determines the quality of institutions?," Policy Research Working Paper Series 2764, The World Bank.
    43. Theo Eicher & Cecilia García-Peñalosa & Tanguy Ypersele, 2009. "Education, corruption, and the distribution of income," Journal of Economic Growth, Springer, vol. 14(3), pages 205-231, September.
    44. Alberto Chong & Luisa Zanforlin, 2000. "Law tradition and institutional quality: some empirical evidence," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(8), pages 1057-1068.
    45. Easterly, William, 2001. "The Middle Class Consensus and Economic Development," Journal of Economic Growth, Springer, vol. 6(4), pages 317-335, December.
    46. Fox, Jonathan A & Brown, L. David, 1998. ""Introduction", in The Struggle for Accountability: The World Bank, NGOs and Grassroots Movements," Center for Global, International and Regional Studies, Working Paper Series qt2gn108dn, Center for Global, International and Regional Studies, UC Santa Cruz.
    47. World Bank, 2010. "World Development Indicators 2010," World Bank Publications - Books, The World Bank Group, number 4373, April.
    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. Peiró-Palomino, Jesús & Perugini, Francesco, 2022. "Regional innovation disparities in Italy: The role of governance," Economic Systems, Elsevier, vol. 46(4).

    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. Ruba A. Aljarallah & Andrew Angus, 2020. "Dilemma of Natural Resource Abundance: A Case Study of Kuwait," SAGE Open, , vol. 10(1), pages 21582440198, January.
    2. José Antonio Alonso & Carlos Garcimartín, 2013. "The Determinants Of Institutional Quality. More On The Debate," Journal of International Development, John Wiley & Sons, Ltd., vol. 25(2), pages 206-226, March.
    3. Omer Javed, 2016. "Determinants of Institutional Quality: A Case Study of IMF Programme Countries," Contributions to Economics, in: The Economic Impact of International Monetary Fund Programmes, edition 1, chapter 0, pages 7-35, Springer.
    4. José Antonio Alonso & Carlos Garcimartín & Luis Rivas, 2011. "Taxes, Foreign Aid and Quality of Governance Institutions," Chapters, in: Mehmet Ugur & David Sunderland (ed.), Does Economic Governance Matter?, chapter 7, Edward Elgar Publishing.
    5. José Antonio Alonso & Carlos Garcimartín, 2011. "Does Aid Hinder Tax Efforts? More Evidence," Discussion Papers 11/04, University of Nottingham, CREDIT.
    6. Ruba Aljarallah, 2021. "An Analysis of the Impact of Rents from Non-renewable Natural Resources and Changes in Human Capital on Institutional Quality: A Case Study of Kuwait," International Journal of Energy Economics and Policy, Econjournals, vol. 11(5), pages 224-234.
    7. Marie-Ange VEGANZONES-VAROUDAKIS & NABLI & Ahmet Faruk AYSAN, 2006. "Governance and Private Investment in the Middle East and North Africa," Working Papers 200627, CERDI.
    8. Adrian Boos & Karin Holm‐Müller, 2012. "A theoretical overview of the relationship between the resource curse and genuine savings as an indicator for “weak” sustainability," Natural Resources Forum, Blackwell Publishing, vol. 36(3), pages 145-159, August.
    9. Islam, Roumeen & Montenegro, Claudio E., 2002. "What determines the quality of institutions?," Policy Research Working Paper Series 2764, The World Bank.
    10. Dwumfour, Richard Adjei & Ntow-Gyamfi, Matthew, 2018. "Natural resources, financial development and institutional quality in Africa: Is there a resource curse?," Resources Policy, Elsevier, vol. 59(C), pages 411-426.
    11. Gema Fabro & José Aixalá, 2013. "Do the Models of Institutional Quality Differ According to the Income Level of the Countries? The Case of the Low-Income Countries," Hacienda Pública Española / Review of Public Economics, IEF, vol. 206(3), pages 11-26, September.
    12. Ahmet Faruk AYSAN & Mustapha Kamel NABLI & Marie‐Ange VÉGANZONÈS‐VAROUDAKIS, 2007. "Governance Institutions And Private Investment: An Application To The Middle East And North Africa," The Developing Economies, Institute of Developing Economies, vol. 45(3), pages 339-377, September.
    13. Ghulam Rasool Madni, 2019. "Probing Institutional Quality Through Ethnic Diversity, Income Inequality and Public Spending," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 142(2), pages 581-595, April.
    14. Schneider, Sophie Therese, 2018. "North-South trade agreements and the quality of institutions: Panel data evidence," Hohenheim Discussion Papers in Business, Economics and Social Sciences 27-2018, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    15. Simplice A. Asongu & Oasis Kodila-Tedika, 2018. "Determinants of Property Rights Protection in Sub-Saharan Africa," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 9(4), pages 1291-1308, December.
    16. Abdoul’ Mijiyawa, 2013. "Determinants of property rights institutions: survey of literature and new evidence," Economics of Governance, Springer, vol. 14(2), pages 127-183, May.
    17. Tsani, Stella, 2013. "Natural resources, governance and institutional quality: The role of resource funds," Resources Policy, Elsevier, vol. 38(2), pages 181-195.
    18. Hosseini, Hossein Mirshojaeian & Kaneko, Shinji, 2013. "Can environmental quality spread through institutions?," Energy Policy, Elsevier, vol. 56(C), pages 312-321.
    19. Ioan POPESCU, 2012. "Institutional quality: criteria, determinants and benefits," THE YEARBOOK OF THE "GH. ZANE" INSTITUTE OF ECONOMIC RESEARCHES, Gheorghe Zane Institute for Economic and Social Research ( from THE ROMANIAN ACADEMY, JASSY BRANCH), vol. 21(1), pages 59-65.
    20. Matthias Busse & Steffen Gröning, 2013. "The resource curse revisited: governance and natural resources," Public Choice, Springer, vol. 154(1), pages 1-20, January.

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:hir:idecdp:2-3. See general information about how to correct material in RePEc.

    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: Keisuke Kawata The email address of this maintainer does not seem to be valid anymore. Please ask Keisuke Kawata to update the entry or send us the correct address (email available below). General contact details of provider: https://edirc.repec.org/data/gshirjp.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.