Institutions and Development : The Interaction between Trade Regime and Political System

Arbeitspapier

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.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: IZA Discussion Papers ; No. 1242

Klassifikation und Themen

• Klassifikation: Wirtschaft ; National Government Expenditures and Related Policies: General ; Economic Growth of Open Economies ; Economic History: Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations: General, International, or Comparative ; Economic Development: General ; Economic History: Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations: Latin America; Caribbean
• Thema: economic development ; institutions ; political system ; public education ; trade ; Entwicklung ; Politik der offenen Tür ; Aussenwirtschaftspolitik ; Politisches System ; Theorie ; Welt

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Falkinger, Josef ; Grossmann, Volker
• Ereignis: Veröffentlichung
• (wer): Institute for the Study of Labor (IZA)
• (wo): Bonn
• (wann): 2004

Weitere Informationen

• Handle: http://hdl.handle.net/10419/20506
• Letzte Aktualisierung: 10.03.2025, 11:46 MEZ