Institutions Trade & Economic Development
In international trade theory, the Stolper-Samuelson theorem demonstrates how changes in relative goods prices affect the returns to factors of production. The theorem predicts that a rise in the relative price of a good will lead to an increase in the real return of the factors used intensively in its production. The resulting redistribution of […]
One of the issues raised by the current refugee and migration crisis in Europe concerns the question of why people take the decision to emigrate. An emerging literature focuses specifically on institutional factors. One strand examines the informal institutions of migration networks. It attempts to evaluate how the strength of a social network in the […]
There is a heated ongoing debate in the field of long term economic development on whether it is geography or ‘institutions’ that has the more important direct effect on current economic performance. However, one area of consensus in this debate is that geography has an indirect effect on economic performance through its influence on the […]
The quality of contracting institutions is among the most important determinants of the relationship between buyers and sellers engaged in international trade. Contractual frictions are magnified in international trade by the fact that if one of the parties reneges on a written contract the dispute has to be resolved in local courts (as opposed to […]
Since 1950 the global Gini coefficient for between-country income inequality has stood at about 55, reflecting a twenty five-fold difference in wealth between the richest and poorest countries. A well-known stylized fact underpinning this feature of the world economy is that the real investment rate of wealthy countries such as Norway and the United States […]
The macroeconomic institutions literature has demonstrated the importance of institutions in promoting economic development and growth. Economists are now digging deeper to understand the microfoundations of this growth at the level of individual firms. A feature of developing economies is that fledgling firms find it more difficult to grow than their counterparts in developed countries […]
In countries where property rights and the rule of law are poorly enforced, and markets fail or are missing, social networks play a fundamental role. Social connections solve information and commitment problems, which enable individuals to have access to credit and insurance or employers to find employees better suited for the jobs that become available. […]
Over the second half of the 20th century, civil conflicts (i.e. intra-state conflict) have become increasingly dominant and now account for a greater share of deaths and hardship than any other form of conflict (the main comparator being inter-state conflict). Empirical research shows that economic variables, particularly poverty and income inequality, are important determinants of […]
There is increasing interest in how natural resources influence political stability. Under a dictatorial regime, political stability is determined by the ability of a ruling group to stay in power. If political power is the route to personal riches by the appropriation of natural resource income, remaining in power is that much more attractive. As […]
The main focus of the recent literature on the economics of institutions has been on the role of institutions that define and enforce contracts and property rights in enhancing economic performance. A key finding of this literature is that countries with better rule of law and more private property rights protection have on average grown […]