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

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plz talk about:

  • 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

 


 

Introduction

 


 

? We have looked the importance of institutions in the development

 

process

 

? Affect transactions costs and efficiency

 


 

? Key to efficient & functioning institutions are credible enforcement

 

rules

 

? Possible that bad institutions can supplant good institutions & vice

 

versa

 

? 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

 


 

Question

 

? 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

 

power

 

? 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

 

Institutions

 

? 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

 

Zealand

 


 

? 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

 

performance

 


 

Implementation

 

? 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

 

estimates

 

? 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

 


 

Results

 

? 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

 

(0.22)

 


 

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

 

2008

 

? 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

 

Performance

 

? 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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