Protection against risk of expropriation 1985 95 10

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Unformatted text preview: st Risk of Expropriation, 1985-95 10 Political institutions and economic performance . LUX USA CHE JPN NOR DNK BEL CAN AUT ISL DEU AUS NLD ITA GBR SWE FIN ISR IRL NZL ESP PRT KOR GRC CHL SGP Log GDP per capita, PPP, in 1995 10 FRA ARG VEN SLV MUS URY MYS ZAF BWA PAN COL HUN CRI TTO BRA TUR ECU FJI JAM PHL BOL GMB IND MEX GAB THA POL TUN DZA SWZ SYR 8 IDN GIN SDN TGO ZAR TCD NGA CIV GHA UGA JOR MAR CMR PER EGY CHN GUY AGO ZWE MRT SEN LSO CAF GTM LKA HND NIC COG COM PAK HTI KEN BFA DOM PRY ZMB BEN MDG YEM BDI RWA MOZ MWI SLE NPL BGD NER MLI TZA ETH 6 0 2 4 Constraint on Executive in 1990s 6 8 Causal Inference In social science we want to make causal statements such as – if countries adopt “better institutions” they will become richer. This is obviously di¢ cult to do by looking at these scatterplots or even their multivariate generalization (Ordinary Least Squares). The critical issue is the identi…cation of causal e¤ects. Why is this so di¢ cult? James A. Robinson (Harvard) The Emergence of Modern Economic Growth: A Comparative and Historical Analysis September 9, 2009 5 / 24 Institutions are Endogenous Institutions could vary because underlying factors di¤er across countries. Geography, ecology, climate? Culture? Perhaps other factors? Montesquieu’ story: Geography determines “human attitudes”, s Human attitudes determine both economic performance and the political system. Institutions potentially in‡uenced by the determinants of income. Identi…cation problem. We can learn only a limited amount from correlations and ordinary least square (OLS) regressions. James A. Robinson (Harvard) The Emergence of Modern Economic Growth: A Comparative and Historical Analysis September 9, 2009 6 / 24 Geography hypothesis: Montesquieu Montesquieu: “The heat of the climate can be so excessive that the body there will be absolutely without strength. So, prostration will pass even to the spirit; no curiosity, no noble enterprise, no generous sentiment; inclinations will all be passive there; laziness there will be happiness”. “People are ... more v...
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This document was uploaded on 02/28/2014 for the course ECON 2328 at Harvard.

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