Colonisation, Institutions and Development: New Evidence

Abstract

This article analyses current attempts to identify the factors underlying long-term economic growth. The author criticises some of the arguments and historical evidence on which the two main explanations that dominate recent literature are based: the institutional approach and the approach focusing on the importance of geographical factors. Using an approach which is deliberately eclectic, the author considers the role of geography, international trade, human capital and institutional quality in explaining development. A new estimation is carried out through Two Stages Least Squares (TSLS) with instrumental variables. The results of the empirical model confirm the central role of institutions in long-term economic growth. However, certain geographical conditions also seem to have influenced countries' chances of progress. The human capital is a less robust factor in explaining economic growth and trade openness does not seem significant in any estimation. Nevertheless, several questions remain to be answered, suggesting that cross-country estimations need to be complemented with a deeper historical analysis.

Role of natural resource abundance, international trade and financial development in the economic development of selected countries

“…Institutions were found to cause economic development in higher income countries whereas economic development tended to promote institutional quality in lower-middle and low income countries (Law et al, 2013). The level of development was also identified by Alonso (2011) as one of the main factors responsible for conditioning institutional quality. Other factors referenced by Alonso were the level of inequality and the non-fiscal features of the state's main resources (to a lesser degree).…”

Economic Governance and Economic Growth in South and East Asia & Pacific Region: Evidence from Systematic Literature Reviews and Meta-analysis

“…This study only offers an overview on the effect of regulation on growth and [18] and Gani [28], this study finds negative, robust and statistically significant effect of corruption on economic growth. A positive sign on this measure should be read as corruption, having growth retarding effects 3 . This supports widely held views that corruption is detrimental to economic growth as it can create obstacles dissuading productive activities.…”

Social Cohesion and Economic Growth: An Empirical Investigation

“…Bowles and Gintis (2002) also consider informal institutions and civil society as complementary to effective formal institutions. Alonso (2011) explains that institutions play vital role, but only together with other factors, such as history.…”