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Title: | Institutions and Development : The Interaction between Trade Regime and Political System |
Keywords: | H50 F43 N10 O10 N16 ddc:330 economic development institutions political system public education trade Entwicklung Politik der offenen Tür Aussenwirtschaftspolitik Politisches System Theorie Welt |
Issue Date: | 16-Oct-2013 |
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. |
URI: | http://koha.mediu.edu.my:8181/xmlui/handle/10419/20506 |
Other Identifiers: | http://hdl.handle.net/10419/20506 ppn:393557677 |
Appears in Collections: | EconStor |
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