Institutions Do Not Rule: Reassessing the Driving Forces of Economic Development

نویسندگان

  • Jinfeng Luo
  • Yi Wen
چکیده

We use cross-country data and instrumental variables widely used in the literature to show that (i) institutions (such as property rights and the rule of law) do not explain industrialization and (ii) agrarian countries and industrial countries have entirely different determinants for income levels. In particular, geography, rather than institutions, explains the income differences among agrarian countries, while institutions appear to matter only for income variations in industrial economies. Moreover, we find it is the stage of economic development (or the absence/presence of industrialization) that explains a country’s quality of institutions rather than vice versa. The finding that institutions do not explain industrialization but are instead explained by industrialization lends support to the well-received view among prominent economic historians—that institutional changes in 17th and 18th century England did not cause the Industrial Revolution. Keywords: geography, institutions, development, income gaps, industrialization. JEL Code: O11, P16, P51. 1 We thank seminar participants at the St. Louis Fed for comments and Judy Ahlers for editorial assistance.

برای دانلود متن کامل این مقاله و بیش از 32 میلیون مقاله دیگر ابتدا ثبت نام کنید

ثبت نام

اگر عضو سایت هستید لطفا وارد حساب کاربری خود شوید

منابع مشابه

Medium Term Plans, Regulation Reforms and Economic Growth Performance in Iran

Determining the driving forces of economic growth has a paramount importance in economic studies. Early studies suggested physical capital accumulation as the main driving force of growth. However, the recent studies try to resolve the flaws of neo classical school on growth by expanding the concept of capital equipment and machinery to a wider range of human knowledge, on one hand, and in...

متن کامل

Does Institutions Matter for Economic Development? Evidence for ASEAN Selected Countries

Abstract The theoretical and applied issues of the relationship between institutions and economic growth have thoroughly been examined in ASEAN countries. This study revisits the issue and tests the role of institutions in the economic growth using the World Governance Indicators (WGI) and uses a new method to examine the impact of the various institutions on the economic growth. We used dynam...

متن کامل

The Rule of Banking System Development in Economic Growth : The Case of Iran

This paper empirically investigates the relationship between banks and economic growth emphasizing the transmission channels from financial development to growth in Iran using time series methodologies, namely Johansen’s co-integration and Granger causality methods in the context of error correction models (ECM). The results show that in our case study banks affect economic growth mainly throug...

متن کامل

Decomposition and Analysis of Driving Forces of GHG Emissions and Emission Reduction Potentials in Iran

Climate change cannot control unless by reduction of GHG emissions to secure level, therefore it is important to identify driving forces and possible scenarios based on targets. In this research, the Logarithmic Mean Divisia Index decomposition approach in combination with Extended Kaya Identity (EKI) are applied to investigate five factors could affect emissions during 1971-2012 in Iran. Thes...

متن کامل

Evaluating the performance of institutions and organizations related to rural sustainability Case: Dehdez district in Izeh County

Introduction One of the necessary principles of rural development is its management. A special approach of development is needed to be planned for every particular area. On the other hand, it is not useful to apply an integrated approach of development by new managing systems. At this point we can clearly understand the important role of institutions and organizations related to the structur...

متن کامل

ذخیره در منابع من


  با ذخیره ی این منبع در منابع من، دسترسی به آن را برای استفاده های بعدی آسان تر کنید

برای دانلود متن کامل این مقاله و بیش از 32 میلیون مقاله دیگر ابتدا ثبت نام کنید

ثبت نام

اگر عضو سایت هستید لطفا وارد حساب کاربری خود شوید

عنوان ژورنال:

دوره   شماره 

صفحات  -

تاریخ انتشار 2015