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The historical economics of corruption and development within Italy

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  • Ilaria Petrarca
  • Roberto Ricciuti

Abstract

We investigate the relationship between corruption and economic performance, focusing on the historical roots of the former. We claim that a sequential mechanism linking history to development exists: first, history defines the quality of social capital; then, social capital determines the level of corruption; finally, corruption affects economic performance. We empirically test this hypothesis on a dataset of Italian provinces, and address the possible endogeneity of corruption by applying an IV model. We use three sets of historical instruments for corruption: 1) foreign dominations that ruled Italian regions between the 16th and 17th century; 2) autocracy/autonomous rule in the 14th century; 3) an index of social capital between the end of the 19th and at the onset of the 20th century. The results confirm the validity of the set of instruments (2) and (3), and indicate a significant impact of historically driven corruption on development.

Suggested Citation

  • Ilaria Petrarca & Roberto Ricciuti, 2013. "The historical economics of corruption and development within Italy," International Journal of Monetary Economics and Finance, Inderscience Enterprises Ltd, vol. 6(2/3), pages 186-202.
    • Handle: RePEc:ids:ijmefi:v:6:y:2013:i:2/3:p:186-202
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    Cited by:

    1. Diego Varela & Giacomo Benedetto & Jose Manuel Sanchez-Santos, 2013. "Editorial statement: The first two years of EJGE," European Journal of Government and Economics, Europa Grande, vol. 2(2), pages 95-99, December.
    2. Mocetti, Sauro & Orlando, Tommaso, 2019. "Corruption, workforce selection and mismatch in the public sector," European Journal of Political Economy, Elsevier, vol. 60(C).

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