Institutions and development
Subtitle: the interaction between trade regime and political system
By: by Josef Falkinger, Volker Grossmann.
Contributors: Grossmann, Volker, 1971-.
Series: Discussion paper ;; no. 1242; Discussion paper (Forschungsinstitut zur Zukunft der Arbeit : Online) ;; no. 1242
Publisher: IZA
Published: 2004
Place of publication: Bonn, Germany
Language: eng
Format: Electronic resource
Subjects: International trade -- Political aspects -- Econometric models; South American -- Economic conditions -- 19th century -- Econometric models
Description: "This paper argues that openness to goods trade in combination with an unequal distribution of political power has been a major determinant of the comparatively slow development of resource- or land-abundant regions like South America and the Caribbean in the nineteenth century. We develop a two-sector general equilibrium model with a tax-financed public sector, and show that in a feudal society (dominated by landed elites) productivity-enhancing public investments like the provision of schooling are typically lower in an open than in a closed economy. Moreover, we find that, under openness to trade, development is faster in a democratic system. We also endogenize the trade regime and demonstrate that, in political equilibrium, a land-abundant and landowner dominated economy supports openness to trade. Finally, we discuss empirical evidence which strongly supports our basic hypotheses"--Forschungsinstitut zur Zukunft der Arbeit web site.
Notes: Includes bibliographical references.
Title from PDF file as viewed on 5/5/2005.
Also available in print.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.