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Unbundling Institutions
Open accessAbstract
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 contracting institutions, but are unable to do so against the risk of expropriation.
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References 11 · Cited by 333
Research works printed but not linked: 12
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Metadata
- Authors
- Acemoglu, D., & Johnson, S.
- Affiliations
- National Bureau of Economic Research (US)
- ORCID
- Johnson, Simon
- Venue
- SSRN Electronic Journal
- Publisher
- Elsevier BV
- Published
- 2004
- ISSN
- 1556-5068 (ISSN-L)
- OpenAlex
- W4229675681
- Cited by
- 333
- References
- 11
- Citations by year
- 2024: 7 · 2023: 25 · 2022: 11 · 2021: 30 · 2020: 33 · 2019: 11 · 2018: 15 · 2017: 14 · 2016: 11 · 2015: 14 · 2014: 14 · 2013: 32 · 2012: 20
- Type
- posted content
- Language
- en
- Open access
- green
- doi.org
- Locations
- SSRN Electronic Journal (acceptedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- DSpace@MIT (Massachusetts Institute of Technology) (submittedVersion, cc-by-nc)
- Topics
- Social Sciences › Development › Culture, Economy, and Development Studies
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Historical Economic and Social Studies
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic Growth and Productivity
- Keywords
- property rights institutions, contracting institutions, expropriation, European colonization, settler mortality, population density, colonial legacy, long-run economic growth, investment, financial development, financial intermediation, informal contracts, institutional quality
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