Institutions, Trade, and Growth: Revisiting the Evidence

30 Pages Posted: 20 Apr 2016  

David Dollar

World Bank - Development Economics Group (DEC)

Aart Kraay

World Bank - Development Research Group (DECRG)

Date Written: March 2003

Abstract

Several recent papers have attempted to identify the partial effects of trade integration and institutional quality on long-run growth using the geographical determinants of trade and the historical determinants of institutions as instruments. Dollar and Kraay show that many of the specifications in these papers are weakly identified despite the apparently good performance of the instruments in first-stage regressions. Consequently, they argue that the cross-country variation in institutions, trade, and their geographical and historical determinants is not very informative about the partial effects of these variables on long-run growth.

This paper - a product of Investment Climate, Development Research Group - is part of a larger effort in the group to study institutions and development.

Suggested Citation

Dollar, David and Kraay, Aart, Institutions, Trade, and Growth: Revisiting the Evidence (March 2003). World Bank Policy Research Working Paper No. 3004. Available at SSRN: https://ssrn.com/abstract=636366

David Dollar (Contact Author)

World Bank - Development Economics Group (DEC) ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

Aart Kraay

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States
202-473-5756 (Phone)
202-522-3518 (Fax)

HOME PAGE: http://econ.worldbank.org/staff/akraay

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