Globalization and Institutional Quality - A Panel Data Analysis

Posted: 6 Dec 2013 Last revised: 2 Aug 2014

See all articles by Andreas Bergh

Andreas Bergh

Research Institute of Industrial Economics (IFN); Lund University - Department of Economics

Irina Mirkina

Lund University - Department of Economics

Therese Nilsson

Research Institute of Industrial Economics (IFN); Lund University - Department of Economics

Date Written: January 19, 2014

Abstract

Using data on institutional quality and the KOF Globalization Index, we examine over 100 countries from1992 to2010 to analyze the relationship between economic and social globalization and six measures of institutional quality, thereby testing Montesquie’s doux commerce thesis, that economic and social interaction lead to improved institutional quality. Results suggest that increasing economic flows and social globalization associate with improving institutions in rich countries, while correlations are negative in poor countries. Our findings also indicate that the negative relationship in poor countries relates to the abundance of natural resources, and should not be interpreted as a causal effect. In summary, results are consistent with the doux commerce thesis but also suggest that the previous findings of positive effects of trade on institutional quality are driven by the relationship in rich countries. We should not expect globalization alone to mitigate the adverse effects of the resource curse in developing countries.

Keywords: Globalization, Institutional quality, Developing countries

Suggested Citation

Bergh, Andreas and Mirkina, Irina and Nilsson, Therese, Globalization and Institutional Quality - A Panel Data Analysis (January 19, 2014). Oxford Development Studies, Vol. 42, No. 3, 365-394, Available at SSRN: https://ssrn.com/abstract=2363788

Andreas Bergh (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
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Stockholm, SE-102 15
Sweden
0707790734 (Phone)

HOME PAGE: http://www.ifn.se/web/AndreasB

Lund University - Department of Economics ( email )

P.O. Box 7082
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Lund
Sweden

HOME PAGE: http://www.nek.lu.se/

Irina Mirkina

Lund University - Department of Economics ( email )

P.O. Box 7082
S-220 07 Lund
Sweden

Therese Nilsson

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Lund University - Department of Economics ( email )

P.O. Box 7082
S-220 07 Lund
Sweden
+46 46 222 46 43 (Phone)

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