Globalization and institutional quality - A panel data analysis

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Abstract

Abstract in Undetermined
Using data on institutional quality and the KOF Globalization Index, we examine over 100 countries from 1992 to 2010 to analyse the relationship between economic and social globalization and six measures of institutional quality, thereby testing Montesquieu's doux commerce thesis, that economic and social interaction lead to improved institutional quality. Results suggest that increasing economic flows and social globalization associate with improving institutions in rich countries, while correlations are negative in poor countries. Our findings also indicate that the negative relationship in poor countries relates to the abundance of natural resources, and should not be interpreted as a causal effect. In summary, results are consistent with the doux commerce thesis but also suggest that the previous findings of positive effects of trade on institutional quality are driven by the relationship in rich countries. We should not expect globalization alone to mitigate the adverse effects of the resource curse in developing countries

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External organisations
  • IMT Institute for Advanced Studies Lucca, Italy
Research areas and keywords

Subject classification (UKÄ) – MANDATORY

  • Economics
  • Economic History
Original languageEnglish
Pages (from-to)365-394
JournalOxford Development Studies
Volume42
Issue number3
StatePublished - 2014
Publication categoryResearch
Peer-reviewedYes