TY  - JOUR
AU  - Rodrik,Dani
AU  - Subramanian,Arvind
AU  - Trebbi,Francesco
TI  - Institutions Rule: The Primacy of Institutions over Geography and Integration in Economic Development
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9305
PY  - 2002
Y2  - November 2002
UR  - http://www.nber.org/papers/w9305
L1  - http://www.nber.org/papers/w9305.pdf
N1  - Author contact info:
Dani Rodrik
John F. Kennedy School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617/495-9454
Fax: 617/496-5747
E-Mail: dani_rodrik@harvard.edu

Arvind Subramanian
Peterson Institute for International Economics
1750 Massachusetts Ave, NW
Washington, DC  20036
E-Mail: asubramanian@piie.com

Francesco Trebbi
University of British Columbia
1873 East Mall
Vancouver, BC, V6T1Z1
Canada
Tel: 604.218.5900
Fax: 604.822.5915
E-Mail: ftrebbi@mail.ubc.ca
AB  - We estimate the respective contributions of institutions, geography, and trade in determining income levels around the world, using recently developed instruments for institutions and trade. Our results indicate that the quality of institutions trumps' everything else. Once institutions are controlled for, measures of geography have at best weak direct effects on incomes, although they have a strong indirect effect by influencing the quality of institutions. Similarly, once institutions are controlled for, trade is almost always insignificant, and often enters the income equation with the wrong' (i.e., negative) sign, although trade too has a positive effect on institutional quality. We relate our results to recent literature, and where differences exist, trace their origins to choices on samples, specification, and instrumentation.
ER  -