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

By Dani Rodrik, Arvind Subramanian, Francesco Trebbi. Social Science Research Network, 2002

546 citations recorded by the source corpus.

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.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/1451c409dd292dd5a96a7f6f3daad8517cad248f

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Citations in the corpus

Accountability and Corruption: Political Institutions Matter (2001, background): “…empirical evidence, which shows that the development of political institutions in different countries was strongly influenced by historical factors associated with geography and colonial heritage; see, for example, Acemoglu et al. (2001, 2002), Easterly and Levine (2002), and Rodrik et al. (2002).”
Trade, Finance, Specialization, and Synchronization (2003, background): “Thus the methodology does not fall victim to the criticism in Rodrik, Subramanian, and Trebbi (2002) that gravity variables merely capture good institutions, in turn conducive to high growth, nor to Persson’s (2001) critique that geography is inherently more conducive to trade within currency…”
Why Are Latin Americans So Unhappy About Reforms? (2005, unknown): “…quality of institutions and economic growth (recent empirical tests of this hypothesis include Knack and Keefer, 1995; Acemoglu et al., 2000; and Rodrik et al., 2002; for a contrarian view, see Glaeser et al., 2004).10 We also find that those who think that hard work is more important than…”
From “Hindu Growth” to Productivity Surge: The Mystery of the Indian Growth Transition (2004, unknown): “determinants of income (based on Acemoglu, Johnson, and Robinson, 2001; and Rodrik, Subramanian, and Trebbi, 2002) with an India dummy.”
The Empirics of Growth: An Update (2003, result): “In this respect, our results are very similar to those of Rodrik, Subramanian, and Trebbi (2002).”
The Formation of Beliefs: Evidence from the Allocation of Land Titles to Squatters (2007, background): “For this debate, see Greif (1994, 2006), Denzau and North (1994), Engerman and Sokoloff (1997), La Porta et al (1998), Acemoglu et al (2001), Rodrik et al (2002), Easterly and Levine (2003), Glaeser et al (2004), Przeworski (2004), North (2005), inter alia.”
When Does Natural Resource Abundance Lead to a Resource Curse (2004, methodology): “A similar line of reasoning is presented in Rodrik et al. (2002).”