Institutions and Development: A View from Below

61 Pages Posted: 6 Dec 2005

See all articles by Rohini Pande

Rohini Pande

Yale University - Economic Growth Center

Christopher Udry

Northwestern University

Date Written: November 2005

Abstract

In this paper we argue the case for greater exploitation of synergies between research on specific institutions based on micro-data and the big questions posed by the institutions and growth literature. To date, the macroeconomic literature on institutions and growth has largely relied on cross-country regression evidence. This has provided compelling evidence for a causal link between a cluster of good institutions and more rapid long run growth. However, an inability to disentangle the effects of specific institutional channels on growth or to understand the impact of institutional change on growth will limit further progress using a cross-country empirical strategy. We suggest two research programs based on micro-data that have significant potential. The first uses policy-induced variation in specific institutions within countries to understand how these institutions influence economic activity. The second exploits the fact that the incentives provided by a given institutional context often vary with individuals' economic and political status. This can help us better understand how institutional change arises in response to changing economic and demographic pressures.

Keywords: Institutions, Growth, Cross-Country Regressions

JEL Classification: O11, O12, O17, P51

Suggested Citation

Pande, Rohini and Udry, Christopher, Institutions and Development: A View from Below (November 2005). Yale University Economic Growth Center Discussion Paper No. 928. Available at SSRN: https://ssrn.com/abstract=864044

Rohini Pande (Contact Author)

Yale University - Economic Growth Center ( email )

Box 208269
New Haven, CT 06520-8269
United States

Christopher Udry

Northwestern University ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

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