Institutional Transplant and Cultural Proximity: Evidence from Nineteenth-Century Prussia

33 Pages Posted: 21 Jan 2016

See all articles by Giampaolo Lecce

Giampaolo Lecce

Università Bocconi; Yale University - Cowles Foundation

Laura Ogliari

Bocconi University

Date Written: December 16, 2015

Abstract

The economic impact of an institutional transplant depends on the underlying cultural environment of the receiving country. This paper provides the first evidence that the positive effect of importing good institutions cancels out when the receiving territories are characterized by cultural traits in conflict with those embedded in the imported institutions. We obtain this result using county-level data from late nineteenth-century Prussia. This environment allows us to exploit both the quasi-natural experiment generated by the radical Napoleonic institutional reforms and the deeply rooted cultural heterogeneity across Prussian counties. First, using religious affiliation as a proxy of cultural commonality, we find no effect of French institutions in Protestant areas. Then, using hand-collected data on pre-Napoleonic reigns we show that kingdoms with stronger ties to French culture exhibit a more effective transplant even when controlling for institutional proximity. Our findings are consistent with the hypothesis that cultural compatibility between the country exporting the institution and the receiving areas is a significant determinant of a successful transplant.

Keywords: institutions, institutional transplant, culture, economic growth

JEL Classification: N130, N430, O470, Z100, Z120

Suggested Citation

Lecce, Giampaolo and Ogliari, Laura, Institutional Transplant and Cultural Proximity: Evidence from Nineteenth-Century Prussia (December 16, 2015). CESifo Working Paper Series No. 5652. Available at SSRN: https://ssrn.com/abstract=2719444

Giampaolo Lecce (Contact Author)

Università Bocconi ( email )

Yale University - Cowles Foundation ( email )

Box 208281
New Haven, CT 06520-8281
United States

Laura Ogliari

Bocconi University ( email )

Via Sarfatti, 25
Milan, 20136
Italy

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