IDEAS home Printed from https://ideas.repec.org/p/use/tkiwps/0911.html
   My bibliography  Save this paper

External influences on local institutions: spatial dependence and openness

Author

Listed:
  • G. Faber
  • M.J. Gerritsen

Abstract

There are both empirical and theoretical arguments for the thesis that external factors have an impact on domestic institutional quality. Consequently, external factors may have large effects on domestic income via local institutions. This paper investigates the role of external factors by estimating the impact of openness and the institutional environment of proximate countries on local institutions and local income. In a 107-country cross-section, we find that both openness (in trade, and especially FDI) and the institutional indicators of nearby countries have an independent impact on local institutional indicators. The effects on income levels are not symmetric, however. We estimate that trade openness plays a major role as a direct determinant of the income level, and a smaller role in determining local institutions. By contrast, institutions of nearby countries are a prime determinant of local institutions, but carry no direct effects on local income levels.

Suggested Citation

  • G. Faber & M.J. Gerritsen, 2009. "External influences on local institutions: spatial dependence and openness," Working Papers 09-11, Utrecht School of Economics.
  • Handle: RePEc:use:tkiwps:0911
    as

    Download full text from publisher

    File URL: https://dspace.library.uu.nl/bitstream/handle/1874/309550/09_11_1.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. 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.
    2. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2004. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," Journal of Economic Growth, Springer, vol. 9(2), pages 131-165, June.
    3. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 1999. "The Quality of Government," Journal of Law, Economics, and Organization, Oxford University Press, vol. 15(1), pages 222-279, April.
    4. Barro, Robert J. & Lee, Jong-Wha, 1993. "International comparisons of educational attainment," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 363-394, December.
    5. Easterly, William & Levine, Ross, 1998. "Troubles with the Neighbours: Africa's Problem, Africa's Opportunity," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 7(1), pages 120-142, March.
    6. Maarten Bosker & Harry Garretsen, 2009. "Economic development and the geography of institutions," Journal of Economic Geography, Oxford University Press, vol. 9(3), pages 295-328, May.
    7. John Luke Gallup & Jeffrey D. Sachs & Andrew Mellinger, 1999. "Geography and Economic Development," CID Working Papers 1, Center for International Development at Harvard University.
    8. Acemoglu,Daron & Robinson,James A., 2009. "Economic Origins of Dictatorship and Democracy," Cambridge Books, Cambridge University Press, number 9780521671422, March.
    9. 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.
    10. Daron Acemoglu & Simon Johnson & James Robinson, 2005. "The Rise of Europe: Atlantic Trade, Institutional Change, and Economic Growth," American Economic Review, American Economic Association, vol. 95(3), pages 546-579, June.
    11. Charles F. Manski, 1993. "Identification of Endogenous Social Effects: The Reflection Problem," Review of Economic Studies, Oxford University Press, vol. 60(3), pages 531-542.
    12. Rietveld, Piet & Wintershoven, Patrick, 1997. "Border effects and spatial autocorrelation in the supply of network infrastructure," Serie Research Memoranda 0030, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    13. Gallup, J.L. & Sachs, J.D. & Mullinger, A., 1999. "Geography and Economic Development," Papers 1, Chicago - Graduate School of Business.
    14. Alessandro Nicita & Marcelo Olarreaga, 2007. "Trade, Production, and Protection Database, 1976--2004," World Bank Economic Review, World Bank Group, vol. 21(1), pages 165-171.
    15. Dollar, David & Kraay, Aart, 2003. "Institutions, trade, and growth," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 133-162, January.
    16. repec:hrv:faseco:30747160 is not listed on IDEAS
    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. Ahmad, Mahyudin & Hall, Stephen G., 2012. "Institutions-growth spatial dependence: An empirical test," MPRA Paper 42360, University Library of Munich, Germany.
    2. Ahmad, Mahyudin & Hall, Stephen G., 2012. "Institutions and growth: Testing the spatial effect using weight matrix based on the institutional distance concept," MPRA Paper 42294, University Library of Munich, Germany.
    3. repec:eee:jpolmo:v:39:y:2017:i:6:p:1065-1085 is not listed on IDEAS

    More about this item

    Keywords

    Economic institutions; Spatial spillovers; Economic openness; Income differences;

    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:use:tkiwps:0911. 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: (Marina Muilwijk) or (Rebekah McClure). General contact details of provider: http://edirc.repec.org/data/eiruunl.html .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.