The Determinants of Economic Development: Institutions or Geography?

Universita Politecnica delle Marche Economics Working Paper No. 217

63 Pages Posted: 13 Nov 2004

See all articles by Andrea Filippo Presbitero

Andrea Filippo Presbitero

Università Politecnica delle Marche - Department of Economics; Centre for Macroeconomics & Finance Research (CeMaFiR)

Date Written: September 2004

Abstract

This work investigates the roots of economic development. The debate about the predominance of institutions over geography has not yet reached a firm conclusion: this analysis wants to highlight the main difficulties that one should address in order to find which are the real determinants of long-run economic growth. I argue that the institutional view is not so strong as it may appear: different specifications and different institutional indicators undermine the exclusive importance of institutions. The results of Acemoglu, Johnson and Robinson in favour of the institutional approach are no more valid if other institutional indicators are used instead of the risk of expropriation. Geographical factors related to the health environment and the physical integration in the world markets play a role in the process of economic growth, beyond their effect on institutional development. Geography seems to be a factor even using different specification of the model. However, in this case, the Instrumental Variable procedure is far from being perfect: lack of sensible indicators and strong problem of endogeneity are the main difficulties. A closest look at the economic history and ecology should always be part of this sort of analysis.

Keywords: Economic development, institution gepgraphy, instrumental variables

JEL Classification: C31, O11, O18, P16

Suggested Citation

Presbitero, Andrea Filippo, The Determinants of Economic Development: Institutions or Geography? (September 2004). Universita Politecnica delle Marche Economics Working Paper No. 217. Available at SSRN: https://ssrn.com/abstract=617422 or http://dx.doi.org/10.2139/ssrn.617422

Andrea Filippo Presbitero (Contact Author)

Università Politecnica delle Marche - Department of Economics ( email )

Piazzale Martelli, 8
Ancona, AN 60121
Italy
+39 0712207074 (Phone)

HOME PAGE: http://sites.google.com/site/presbitero/

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