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plz talk about: Relationship among "culture", institutions,-(Answered)


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  • Relationship?among??culture?,?institutions,?and?development?among?regions?of?the?Europe.
  • i need the answer around 250 and base on my ppt. thx

Institutions: Sources & Dynamics


History, Geography, Politics






? We have looked the importance of institutions in the development




? Affect transactions costs and efficiency



? Key to efficient & functioning institutions are credible enforcement




? Possible that bad institutions can supplant good institutions & vice




? What are the characteristics of good institutions?


? Reduce transactions cost through:


? Eliminating/reducing Moral hazard


? Eliminating/reducing Adverse Selection



? Also argued that institutions shape and are shaped by development


and evolve to play different roles in the development process


? Have looked at empirical evidence





? But what are the origins of institutions and


how do they evolve?


? Generally have two origins:


? Historical origins (Acemoglu et al, various


incarnations: a. original development of


institutions (magna carta) & b. colonial transplant;


Nunn, Nunn and Wanchekon


? Each mediated by resources and prevailing environment



? Pre-eminence of geography (out of Africa


hypothesis: Asraf & Galor, Galor & Ozark



? Will take the historical approach first



Question II


? Most formal of institutions anywhere is the law of


the land---the constitution


? US and Mexico by all accounts very close and very


similar in most respects, yet so different


? WHY is this the case


? Look at the Mexican and the US constitutions


? Similarities: both are ?democracies?


? Differences: power of state versus power of presidency


? Decentralization versus centralized power


? Property rights/land rights


? Source of ultimate power: people versus state



Source of these differences


? History and prevailing conditions:


? England and Spain


? How the framers of the constitution came to




? Economic and social conditions in the colonies at


the time of the framing of the constitution


? Treatment of indigenous people in the colonies


? Geography again here: population pressure on


land in the two colonies



Empirical Evidence: Colonial Origins of




? Do institutions affect economic development & does


history affect the development of institutions?


? Answered the first question in the affirmative but


need to look at second question empirically


? Use 2 famous studies:


? Colonial origins of institutions (Acemoglu et al: 2000)


? Institutions and slavery: Nunn: 2008)



? Models are simple: Historical event -> institutions ->


present day development trjectory



Acemoglu et al: 2000



? Why do some country grow faster while others do not?


? Not capital, not technology, not human nature, not natural or


human resources: boils down to differences in institutions



? But what explains why some countries have high quality


and growth enhancing institutions whiles others do not?


? History of colonial settlement/non settlement (colonization


strategy) itself influenced by colonial environment (is


geography to blame here?)



? Model is simple: most countries in the world came under


colonial rule at some point:


? Type of colonization strategy determined early


institutions which still persist today.


? Type of institutions today determine the growth rate



Types of Colonization Experiences


? Not all colonization born equal: some ?good? some bad.


? 2 polar extremes---extractive states (Belgians in Congo) and


settler colonies (New Europes)---USA, Canada, Australia, New





? Strategy influenced by feasibility of settlement


? Institutions developed at the beginning persist today (path


dependence or self reinforcing nature of institutions)


? Settler mortality determines feasibility of settlements


? Settler mortality -> settlements -> early institutions ->


current institutions -> current development performance


? Can use early settler mortality rates as ?instruments? for


current day institutions to explain current economic







? What explains the patterns of colonial


settlement/non settlement?


? Do colonial settlement patterns explain institutions


as measured protection against expropriation risk?


? Do these institutions explain performance today?


? Set up a 4 equation model:


? Yi = ?Ri + X? + ?i ; Ri = ?Ci + X?r + vri; Ci = ?Si + X?c + vci;


? Si = ?sMi + X?s + vsi


? ? , ? coefficients of interest


? Ri is expropriation risk which may be endogenous so


instrument using Mortality (M), C is early institutions



Why this set up?


? Need for instrument of current institutions


which may be endogenous hence biased




? Early institution? Could also have long lasting


effects: indeed this is the argument


? Colonial mortality rates? Yes can affect


institutions but cannot directly affect growth


rate today---the mark of a good instrument





? First stage:


? Protection against expropriation risk


? European settlements in 1900 3.20 (0.61); 3.00 (0.78)


? Log settler mortality rates -0.61 (0.13); -0.52 (0.14)



? Democracy in 1900


? European settlements in 1900 8.60 (0.93); 8.10 (1.20)


? Log settler mortality rates -1.20 (0.24) ; -0.89 (0.25)



? Second Stage


? Log per capita income


? Protections against expropriation risk 0.95 (0.16); 0.98





Challenges: Abouy (2012)


? Challenges based on:


? Validity of mortality data (only 28 countries have


mortality data)


? Mortality rates did not come from settlers but some


other groups---but mostly from soldiers who may die


from disease or way



? Controlling for the mortality rates and adding


other controls lead to virtually elimination of the


relationship between expropriation risks and


mortality rates



Nunn: Slavery and Economic Performance




? Why are institutions so poorly developed in Africa?


Some blame culture. Linguistic heterogeneity, tribal


warfare, etc.


? Recent explanations center around the long period


of slave trade


? Long period of exporting slavery led to the


fragmentation of societies---not large societies could


form?Nunn (2008).


? Slave trade also led to lack of social capital---trust--hence increase transactions cost (Nunn and


Wanchekon: 2011)



Various African Slave Trades


? Africa experienced 4 slave trades simultaneously between 1400


and 1900


? Atlantic Slave trade, the best known where slaves shipped from


Africa to Europe & the Americas


? The Trans Saharan Slave trade: Slaves shipped from South of the


Sahara to North African and the Arab world


? The Red Sea Slave Trade where slaves shipped from inland of the


read sea area and sent to Middle East and India


? Indian Ocean Slave Trade: Slaves taken from East Africa and


shipped either to the Middle East, India or planation Islands in the


Indian Ocean (e.g. Mauritius)


? About 20 million slaves were exported during this time frame


? Adu Boahen and JD Fage estimate that for every African slave


exported about 4 perished



Causal Effects of Slave Trade on Economic




? Several ways in which such massive human trade could


impact economic performance


? Loss of human capital and labor: Most productive and


strong ones were the ones sold away---implications for


production and intergeneration transmission of vitality


? Wars to capture the slaves that further killed more people


and destroy production


? Institutional breakdown and disorder


? Generate insecurity and uncertainty


? Political instability and collapse of existing governance


? Anarchy and chaos as its replacement


? Kongo kingdom is a classic example: kidnapping etc



Nunn (2008)


A Reduced form analysis---combination of all


aspects of ways in which slave exports could


affect economic performance


Yi = slave exports + X? + ei


Coefficient of Slave exports (-.112 - -0.076) all


significant at .01


Iv estimates (-0.201 -- -0.286)



Causal Mechanisms


? Weaken ties between villages hence


discourage formation of larger communities


? Under-development of states (regional


integration, Africa must unite!!!)


? Wantchekon and Nunn(2011)


? Slave trade and trust using same data


? Find that slave exports lead to lack of trust


among neighbors



Data Issues


? Major Problem is the data on slave exports which


Nunn constructed from Archival data


? How do you know which country particular slave


came from


? Present day African countries not formed until the Berlin


Conference (1844)


? Boundaries cut across tribes and ethnicity


? Nature of slave raids



? Implications are that data is not likely to be accurate


? But I think it is a start that should be built upon.




Paper#9209635 | Written in 27-Jul-2016

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