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Economic development, growth, institutions and geography

  • Bhupatiraju S.
  • Verspagen B.


In this paper, we test the Rodrik et al 2004 framework to explain differences in development levels across countries by using a broader set of definitions for institutions, geography and economic variables. We use a multi-faceted database to measure institutions in an attempt to go beyond the single-dimension measures that are often employed. We find that institutions trump other factors geography and trade when we use GDP per capita as an independent variable. When we expand the dependent variable to include other aspects of development, such as growth and investment, we find that institutions, growth and geography are all important variables. In this case, institutions no longer trump the other factors. In this case, we also find that the same institutions variable that was positively associated to GDP per capita is now negatively correlated with the more dynamic development variable.

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Paper provided by United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT) in its series MERIT Working Papers with number 056.

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Date of creation: 2013
Date of revision:
Handle: RePEc:unm:unumer:2013056
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  1. Sudip Ranjan Basu, 2008. "A New Way To Link Development To Institutions, Policies And Geography," UNCTAD Blue Series Papers 37, United Nations Conference on Trade and Development.
  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.
  3. Noguer, Marta & Siscart, Marc, 2005. "Trade raises income: a precise and robust result," Journal of International Economics, Elsevier, vol. 65(2), pages 447-460, March.
  4. Rubinstein, Yona & Helpman, Elhanan & Melitz, Marc, 2008. "Estimating Trade Flows: Trading Partners and Trading Volumes," Scholarly Articles 3228230, Harvard University Department of Economics.
  5. 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.
  6. Flavio Vilela Vieira & Aderbal Oliveira Damasceno, 2011. "Is There a Primary Roleof Institutions on Explaining Cross Country Differences in IncomeLevels and Long-Run Economic Growth?," Anais do XXXVII Encontro Nacional de Economia [Proceedings of the 37th Brazilian Economics Meeting] 77, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
  7. Dollar, David & Kraay, Aart, 2001. "Growth is good for the poor," Policy Research Working Paper Series 2587, The World Bank.
  8. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert Vishny, 1998. "The Quality of Goverment," NBER Working Papers 6727, National Bureau of Economic Research, Inc.
  9. Rodríguez, Francisco & Rodrik, Dani, 1999. "Trade Policy and Economic Growth: A Sceptic's Guide to the Cross-National Evidence," CEPR Discussion Papers 2143, C.E.P.R. Discussion Papers.
  10. Bhupathiraju, Samyukta & Verspagen, Bart & Ziesemer, Thomas, 2013. "Summarizing large spatial datasets: Spatial principal components and spatial canonical correlation," MERIT Working Papers 011, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  11. Dollar, David & Kraay, Aart, 2003. "Institutions, trade, and growth : revisiting the evidence," Policy Research Working Paper Series 3004, The World Bank.
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