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Institutions or human capital: which is more important for economic performance? Evidence from Brazil

Author

Listed:
  • Thais W. Niquito

    (State University of Santa Catarina (UDESC))

  • Felipe Garcia Ribeiro

    (Federal University of Pelotas (UFPel))

  • Marcelo Savino Portugal

    (Federal University of Rio Grande do Sul (UFRGS))

Abstract

We investigate the role of institutions and human capital on economic performance of Brazilian municipalities. We use instrumental variables with two-stage least squares estimators for capturing causal relationships. We found evidence that institutional quality has an important and robust effect on the income of municipalities. However, there is no robust evidence for the role of human capital. These results are similar to what Acemoglu, Galleano and Robinson (2014) documented in their research conducted with cross-country data. Human capital is likely to be a consequence of institutions.

Suggested Citation

  • Thais W. Niquito & Felipe Garcia Ribeiro & Marcelo Savino Portugal, 2018. "Institutions or human capital: which is more important for economic performance? Evidence from Brazil," Economics Bulletin, AccessEcon, vol. 38(2), pages 1069-1076.
    • Handle: RePEc:ebl:ecbull:eb-17-00841
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    References listed on IDEAS

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    1. Acemoglu, Daron & Johnson, Simon & Robinson, James A., 2005. "Institutions as a Fundamental Cause of Long-Run Growth," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 6, pages 385-472, Elsevier.
    2. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
    3. Luciano Nakabashi & Ana Elisa Gonçalves Pereira & Adolfo Sachsida, 2013. "Institutions and growth: a developing country case study," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 40(5), pages 614-634, October.
    4. Edward L. Glaeser & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2004. "Do Institutions Cause Growth?," Journal of Economic Growth, Springer, vol. 9(3), pages 271-303, September.
    5. Daron Acemoglu & Simon Johnson & James A. Robinson, 2002. "Reversal of Fortune: Geography and Institutions in the Making of the Modern World Income Distribution," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(4), pages 1231-1294.
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    Citations

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    Cited by:

    1. Linda Glawe & Helmut Wagner, 2019. "The deep determinants of economic development in China—a provincial perspective," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 24(4), pages 484-514, October.
    2. Luciano Nakabashi & Ana Elisa Pereira, 2023. "Factors of production, productivity, institutions, and development: Evidence from Brazil," Review of Development Economics, Wiley Blackwell, vol. 27(2), pages 1034-1055, May.
    3. Doré, Natalia I. & Teixeira, Aurora A.C., 2023. "The role of human capital, structural change, and institutional quality on Brazil's economic growth over the last two hundred years (1822–2019)," Structural Change and Economic Dynamics, Elsevier, vol. 66(C), pages 1-12.
    4. William Y. N. Suzuki & Marcio P. Laurini & Luciano Nakabashi, 2022. "Spatial heterogeneities, institutions, and income: Evidence for Brazil," Papers in Regional Science, Wiley Blackwell, vol. 101(3), pages 537-571, June.
    5. Linda Glawe & Helmut Wagner, 2023. "The “Double Trap” in China—Multiple Equilibria in Institutions and Income and their Causal Relationship," Open Economies Review, Springer, vol. 34(3), pages 703-757, July.

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    More about this item

    Keywords

    economic development; Brazil; institutional quality; human capital;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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