How Bad Can a Government Be? Neighborhood Constraints and the Quality of National Governments

42 Pages Posted: 19 May 2005

See all articles by Robert K. Fleck

Robert K. Fleck

Montana State University - Bozeman - Department of Agricultural Economics and Economics

F. Andrew Hanssen

Clemson University - John E. Walker Department of Economics

Date Written: May 17, 2005

Abstract

Poorly governed (e.g., repressive) countries tend to be located near other poorly governed countries, and well governed countries near other well governed countries. The previous literature, by identifying country characteristics (e.g., ethnic fractionalization) that may influence government quality, provides one potential explanation: Neighboring countries tend to be similar with respect to those characteristics. In this paper, we provide a different, though complementary, explanation: The ability of a ruler to implement policy that displeases the country's populace is constrained by opportunities for residents to relocate to other countries nearby. To generate testable predictions about the effects of such "neighborhood constraints" on government quality, we develop a simple theoretical model. We test the model's predictions using cross-sectional and panel data, controlling for other determinants of government quality. The empirical results support the model's predictions.

Keywords: Institutions, government quality

JEL Classification: D72, D73

Suggested Citation

Fleck, Robert K. and Hanssen, F., How Bad Can a Government Be? Neighborhood Constraints and the Quality of National Governments (May 17, 2005). Available at SSRN: https://ssrn.com/abstract=718102 or http://dx.doi.org/10.2139/ssrn.718102

Robert K. Fleck

Montana State University - Bozeman - Department of Agricultural Economics and Economics ( email )

P.O. Box 172920
Bozeman, MT 59717-2920
United States
406-994-5603 (Phone)
406-994-4838 (Fax)

F. Hanssen (Contact Author)

Clemson University - John E. Walker Department of Economics ( email )

Clemson, SC 29634
United States

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