Revisiting the Economic Performance and Institutions Debate in SSA Countries: The Role of Legal Origins in the Context of Ethnic Heterogeneity

Abstract

We contribute to the literature of economic performance and institutions by analysing how the interplay between historical legal roots and ethnic heterogeneity can determine current economic outcomes estimating various specifications of the national production function. Our empirical investigation includes a sample of 35 Sub-Saharan (SSA) countries which are typically characterised by a high degree of ethnic fragmentation, often emanating from haphazardly drawn colonial borders, while the legal systems in Africa have been exogenously implanted by the respective colonial powers. Our main results show that although the adoption of common British law (\textit{Common}) is generally associated with better economic outcomes, in the presence of high ethnic heterogeneity the French civil law (\textit{Civil}) outperforms British common law in terms of national economic performance because it is more effective in promoting political stability, and coordination. The latter characteristic is necessary for the efficient use of natural resources that are often abundant in SSA countries and constitute a major source of government revenue.

Keywords: Legal Origins, Ethnic Heterogeneity, GDP per Capita, Technical Efficiency, Sub-Saharan Africa

JEL Classification: 047,055