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Cited by 2,385Culture, Economy, and Development StudiesHistorical Economic and Social StudiesCorruption and Economic Development

Unbundling Institutions

Acemoglu, Daron, Johnson, Simon·2005·Journal of Political Economy
DOI 10.1086/432166
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Abstract

This paper evaluates the importance of "property rights institutions," which protect citizens against expropriation by the government and powerful elites, and "contracting institutions," which enable private contracts between citizens. We exploit exogenous variation in both types of institutions driven by colonial history and document strong first‐stage relationships between property rights institutions and the determinants of European colonization strategy (settler mortality and population density before colonization) and between contracting institutions and the identity of the colonizing power. Using this instrumental variables approach, we find that property rights institutions have a first‐order effect on long‐run economic growth, investment, and financial development. Contracting institutions appear to matter only for the form of financial intermediation. A possible explanation for this pattern is that individuals often find ways of altering the terms of their formal and informal contracts to avoid the adverse effects of weak contracting institutions but find it harder to mitigate the risk of expropriation in this way.

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  • More entrepreneurial activity shifted toward productive entrepreneurship strengthens economic development.

    “More entrepreneurial activity is shifted toward productive entrepreneurship that strengthens economic development (Acemoglu & Johnson, 2005).”

    From The Paradox of Ethiopia's Underdevelopment: Endogenous Factors in Retrospect (2021) · cites this paper as Acemoglu & Johnson, 2005

  • Estimations on individual female HIV rates control for alternative country-level variables such as contractual institutions from Acemoglu and Johnson (2005) and conflict measures from PRIO.

    “We have also run a series of estimations on individual female HIV rates controlling for alternative ­ country-level variables such as the various measures of contractual institutions from Acemoglu and Johnson ( 2005 ) .”

    From Legal Origins and Female HIV (2018) · cites this paper as Acemoglu and Johnson (2005)

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Authors
Acemoglu, D., & Johnson, S.
Affiliations
Massachusetts Institute of Technology (US)
ORCID
Johnson, Simon
Venue
Journal of Political Economy
Publisher
University of Chicago Press
Published
2005-10
Volume
113
Issue
5
Pages
949-995
ISSN
  • 0022-3808 (ISSN-L)
  • 1537-534X
DOI
10.1086/432166
OpenAlex
W4240669445
Cited by
2,385
References
4
Citations by year
2026: 166 · 2025: 151 · 2024: 129 · 2023: 143 · 2022: 124 · 2021: 143 · 2020: 135 · 2019: 150 · 2018: 100 · 2017: 125 · 2016: 101 · 2015: 109 · 2014: 123 · 2013: 128 · 2012: 105
FWCI
144.02
Type
journal article
Language
en
Open access
closed
Locations
Journal of Political Economy (publishedVersion)
Topics
  • Social Sciences › Demography › Culture, Economy, and Development Studies
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Historical Economic and Social Studies
  • Social Sciences › Sociology and Political Science › Corruption and Economic Development
Keywords
property rights institutions, contracting institutions, expropriation, European colonization, settler mortality, population density, financial development, investment, long-run economic growth, financial intermediation, informal contracts, institutional quality

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