Contract enforcement, investment and growth in Uruguay since 1870
Institutions and their quality are central concepts in the recent development and institutional economics literatures. Our hypothesis is that inadequate contract enforcement has hindered investment and, in consequence, indirectly has had a negative effect on Uruguay’s long-term growth performance. We first review the main concepts and the approaches to define and measure the quality of contract enforcement. We then introduce one measure that has the advantages of being measurable into the past and not depending on subjective judgments; namely, the “contract intensive money” (CIM)indicator proposed by Clague et al. (1999). Using our long series for the CIM indicator, and extending key macroeconomic variables backwards to 1870, we are able to estimate a structural model to explore the plausibility of our hypothesis. In the estimation, based on the seemingly unrelated regressions (SUR) method, we find support for the thesis that the quality of contract enforcement influences growth through its impact on investment. Put differently, our results suggest that poor contract enforcement played a significant role at the root of Uruguay’s underperformance, and in its experience of (relative) long-run decline.
|Date of creation:||Jan 2013|
|Date of revision:|
|Contact details of provider:|| Postal: Joaquín Requena 1375, CP 11200, Montevideo|
Phone: (598) 2400-0406
Fax: (598) 2419-8727
Web page: http://www.iecon.ccee.edu.uy/
More information through EDIRC
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.:
- Woodruff, Christopher, 1998. "Contract enforcement and trade liberalization in Mexico's footwear industry," World Development, Elsevier, vol. 26(6), pages 979-991, June.
- Apergis, Nicholas & Tsoumas, Chris, 2009. "A survey of the Feldstein-Horioka puzzle: What has been done and where we stand," Research in Economics, Elsevier, vol. 63(2), pages 64-76, June.
- Leandro Prados de la Escosura & Isabel Sanz-Villarroya, 2009. "Contract enforcement, capital accumulation, and Argentina's long-run decline," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 3(1), pages 1-26, January.
- A.V. Raja & Hans-Bernd Schäfer, .
"Are Inventories A Buffer Against Weak Legal Systems?,"
German Working Papers in Law and Economics
2004-1-1089, Berkeley Electronic Press.
- Angara V. Raja & Hans-Bernd Schaefer, 2007. "Are Inventories a Buffer Against Weak Legal Systems?," Kyklos, Wiley Blackwell, vol. 60(3), pages 415-439, 08.
- Keefer, Philip, 2004. "A review of the political economy of governance : from property rights to voice," Policy Research Working Paper Series 3315, The World Bank.
- Clarke, George, 2001. "How the quality of institutions affects technological deepening in developing countries," Policy Research Working Paper Series 2603, The World Bank.
- Daniel Berkowitz & Katharina Pistor & Jean-Francois Richard, 2000.
"Economic Development, Legality, and the Transplant Effect,"
CID Working Papers
39, Center for International Development at Harvard University.
- 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.
- Daniel Berkowitz & Karina Pistor & Jean-Francois Richard, 2001. "Economic Development, Legality, and the Transplant Effect," William Davidson Institute Working Papers Series 410, William Davidson Institute at the University of Michigan.
- Daniel Berkowitz & Katharina Pistor & Jean-Francois Richard, 2000. "Economic Development, Legality, and the Transplant Effect," William Davidson Institute Working Papers Series 308, William Davidson Institute at the University of Michigan.
- Ross Levine, 1998.
"The legal environment, banks, and long-run economic growth,"
Federal Reserve Bank of Cleveland, issue Aug, pages 596-620.
- Levine, Ross, 1998. "The Legal Environment, Banks, and Long-Run Economic Growth," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 30(3), pages 596-613, August.
- Rafael LaPorta & Florencio Lopez de-Silanes & Andrei Shleifer & Robert W. Vishny, 1997.
"Legal Determinants of External Finance,"
Harvard Institute of Economic Research Working Papers
1788, Harvard - Institute of Economic Research.
- Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer & Robert W. Vishny, 1997. "Legal Determinants of External Finance," NBER Working Papers 5879, National Bureau of Economic Research, Inc.
- RAFAEL LaPORTA & FLORENCIO LOPEZ-de-SILANES & ANDREI SHLEIFER & ROBERT W. VISHNY, . "Legal Determinants of External Finance,"," CRSP working papers 324, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
- Rafael LaPorta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, . "Legal Determinants of External Finance," Working Paper 19443, Harvard University OpenScholar.
- Sudeshna Ghosh Banerjee & Jennifer M. Oetzel & Rupa Ranganathan, 2006. "Private Provision of Infrastructure in Emerging Markets: Do Institutions Matter?," Development Policy Review, Overseas Development Institute, vol. 24(2), pages 175-202, 03.
- Dani Rodrik, 2000.
"Institutions for High-Quality Growth: What They are and How to Acquire Them,"
NBER Working Papers
7540, National Bureau of Economic Research, Inc.
- Dani Rodrik, 2006. "Institutions for High-Quality Growth: What They Are and How to Acquire Them," Chapters, in: Institutions, Globalisation and Empowerment, chapter 2 Edward Elgar Publishing.
- Rodrik, Dani, 2000. "Institutions For High-Quality Growth: What They Are And How To Acquire Them," CEPR Discussion Papers 2370, C.E.P.R. Discussion Papers.
- Aron, Janine, 2000. "Growth and Institutions: A Review of the Evidence," World Bank Research Observer, World Bank Group, vol. 15(1), pages 99-135, February.
- Robert J. Barro, 1991.
"Economic Growth in a Cross Section of Countries,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 106(2), pages 407-443.
- Barro, R.J., 1989. "Economic Growth In A Cross Section Of Countries," RCER Working Papers 201, University of Rochester - Center for Economic Research (RCER).
- Robert J. Barro, 1989. "Economic Growth in a Cross Section of Countries," NBER Working Papers 3120, National Bureau of Economic Research, Inc.
- N. Gregory Mankiw & David Romer & David N. Weil, 1992.
"A Contribution to the Empirics of Economic Growth,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 107(2), pages 407-437.
- Daron Acemoglu & Simon Johnson, 2005.
Journal of Political Economy,
University of Chicago Press, vol. 113(5), pages 949-995, October.
- Jorge Álvarez & Henry Willebald, 2013. "Agrarian income distribution, land ownership systems, and economic performance: Settler economies during the first globalization," Documentos de trabajo 30, Programa de Historia Económica, FCS, Udelar.
- Lin, Chen & Lin, Ping & Song, Frank, 2010. "Property rights protection and corporate R&D: Evidence from China," Journal of Development Economics, Elsevier, vol. 93(1), pages 49-62, September.
- Simeon Djankov & Oliver Hart & Caralee McLiesh & Andrei Shleifer, 2008.
"Debt Enforcement around the World,"
Journal of Political Economy,
University of Chicago Press, vol. 116(6), pages 1105-1149, December.
- Shleifer, Andrei & McLiesh, Caralee & Hart, Oliver & Djankov, Simeon, 2008. "Debt Enforcement Around the World," Scholarly Articles 2961825, Harvard University Department of Economics.
- Simeon Djankov & Oliver Hart & Caralee McLiesh & Andrei Shleifer, 2006. "Debt Enforcement Around the World," NBER Working Papers 12807, National Bureau of Economic Research, Inc.
- Gow, Hamish R. & Streeter, Deborah H. & Swinnen, Johan F.M., 2000.
"How private contract enforcement mechanisms can succeed where public institutions fail: the case of Juhocukor a.s,"
Agricultural Economics of Agricultural Economists,
International Association of Agricultural Economists, vol. 23(3), September.
- Gow, Hamish R. & Streeter, Deborah H. & Swinnen, Johan F. M., 2000. "How private contract enforcement mechanisms can succeed where public institutions fail: the case of Juhocukor a.s," Agricultural Economics, Blackwell, vol. 23(3), pages 253-265, September.
- Günther Rehme, 2011.
"Endogenous Policy And Cross‐Country Growth Empirics,"
Scottish Journal of Political Economy,
Scottish Economic Society, vol. 58(2), pages 262-296, 05.
- G? Rehme, 2004. "Endogenous Policy and Cross-Country Growth Empirics," Econometric Society 2004 North American Summer Meetings 262, Econometric Society.
- Rehme, Günther, 2007. "Endogenous policy and cross-country growth empirics," Darmstadt Discussion Papers in Economics 182, Darmstadt University of Technology, Department of Law and Economics.
- Prados de la Escosura, Leandro & Sanz Villarroya, Isabel, 2006. "Contract enforcement and Argentina's long-run decline," IFCS - Working Papers in Economic History.WH wp06-06, Universidad Carlos III de Madrid. Instituto Figuerola.
- Loayza, N. & Schmidt, K. & Serven, L., 1999.
"What Drives Private Saving Across the World?,"
47, Cambridge - Risk, Information & Quantity Signals.
- Alexander Monge-Naranjo, 2009. "Entrepreneurship and firm heterogeneity with limited enforcement," Annals of Finance, Springer, vol. 5(3), pages 465-494, June.
- Clague, Christopher, et al, 1999. "Contract-Intensive Money: Contract Enforcement, Property Rights, and Economic Performance," Journal of Economic Growth, Springer, vol. 4(2), pages 185-211, June.
- Rohini Pande & Christopher Udry, 2005. "Institutions and Development:A View from Below," Working Papers 928, Economic Growth Center, Yale University.
- Dollar, David & Easterly, William, 1999.
"The Search for the Key: Aid, Investment and Policies in Africa,"
Journal of African Economies,
Centre for the Study of African Economies (CSAE), vol. 8(4), pages 546-77, December.
- Dollar, David & Easterly, William, 1999. "The search for the key : aid, investment, and policies in Africa," Policy Research Working Paper Series 2070, The World Bank.
- Jeffrey G. Williamson, 2000. "Land, Labor and Globalization in the Pre-Industrial Third World," NBER Working Papers 7784, National Bureau of Economic Research, Inc.
- Devarajan, Shantayanan & Easterley, William R. & Pack, Howard, 2001. "Is investment in Africa too low or too high : macro and micro evidence," Policy Research Working Paper Series 2519, The World Bank.
- Bildirici, M. & Orcan, M. & Sunal, S. & Aykaç, E., 2005. "Determinants of Human Capital Theory, Growth and Brain Drain: An Econometric Analysis for 77 Countries," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 5(2).
- 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.
When requesting a correction, please mention this item's handle: RePEc:ulr:wpaper:dt-01-13. 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: (Andrés Dean)
If references are entirely missing, you can add them using this form.