Institutions Rule : The Primacy of Institutions over Integration and Geography in Economic Development

Author/Editor:

Arvind Subramanian ; Francesco Trebbi ; Dani Rodrik

Publication Date:

November 1, 2002

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

We estimate the respective contributions of institutions, geography, and trade in determining cross-country income levels using recently developed instruments for institutions and trade. Our results indicate that the quality of institutions "trumps" everything else. Controlling for institutions, geography have at best weak direct effects on incomes, although it has a strong indirect effect through institutions. Similarly, controlling for institutions, trade has a negative, albeit, insignificant direct effect on income, although trade too has a positive effect on institutional quality. We relate our results to recent literature, and where differences exist, trace their origins to choices on samples, specification, and instrumentation.

Series:

Working Paper No. 02/189

Subject:

English

Publication Date:

November 1, 2002

ISBN/ISSN:

9781451859621/1018-5941

Stock No:

WPIEA1892002

Format:

Paper

Pages:

46

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