IDEAS home Printed from https://ideas.repec.org/p/fpr/ifprid/1082.html
   My bibliography  Save this paper

Institutions, geography, trade, and income per capita: A spatial-simultaneous equation approach

Author

Listed:
  • Ngeleza, Guyslain

Abstract

This paper tests a series of prominent hypotheses regarding how institutions, geography, and trade interact to influence income per capita using a novel spatial econometric approach to control for both spillovers among neighboring countries and spatially correlated omitted variables. Simultaneous equations are used to identify alternative channels through which country characteristics might affect income through trade and institutions, and then to test the robustness of those effects. Evidence indicated that both institutions and trade influence growth. Geographical factors such as whether a country is landlocked and its distance to the equator influence income, but only through trade. Data covering 95 countries across the world from 1960 through 2002 was used to construct a pooled dataset of 5-year averages (9 in all) centered on 1960, 1965, and so on through 2000. Both limited and full information estimators, partly based on a generalized moments (GM) estimator for spatial autoregressive coefficients, were used. These allow for spatial error correlation, correlation across equations, and the presence of spatially lagged dependent variables.

Suggested Citation

  • Ngeleza, Guyslain, 2011. "Institutions, geography, trade, and income per capita: A spatial-simultaneous equation approach," IFPRI discussion papers 1082, International Food Policy Research Institute (IFPRI).
    • Handle: RePEc:fpr:ifprid:1082
    as

    Download full text from publisher

    File URL: http://www.ifpri.org/sites/default/files/publications/ifpridp01082.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Dollar, David & Kraay, Aart, 2003. "Institutions, trade, and growth : revisiting the evidence," Policy Research Working Paper Series 3004, The World Bank.
    2. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
    3. Conley, Timothy G & Ligon, Ethan, 2002. "Economic Distance and Cross-Country Spillovers," Journal of Economic Growth, Springer, vol. 7(2), pages 157-187, June.
    4. Kelejian, Harry H. & Prucha, Ingmar R., 2004. "Estimation of simultaneous systems of spatially interrelated cross sectional equations," Journal of Econometrics, Elsevier, vol. 118(1-2), pages 27-50.
    5. H. Kelejian, Harry & Prucha, Ingmar R., 2001. "On the asymptotic distribution of the Moran I test statistic with applications," Journal of Econometrics, Elsevier, vol. 104(2), pages 219-257, September.
    6. 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.
    7. Jeffrey D. Sachs, 2001. "Tropical Underdevelopment," NBER Working Papers 8119, National Bureau of Economic Research, Inc.
    8. Maria ABREU & Henri L.F. DE GROOT & Raymond J.G.M. FLORAX, 2005. "Space And Growth: A Survey Of Empirical Evidence And Methods," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 21, pages 13-44.
    9. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(1), pages 83-116.
    10. Dollar, David & Kraay, Aart, 2003. "Institutions, trade, and growth," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 133-162, January.
    11. Anselin, Luc, 2002. "Under the hood : Issues in the specification and interpretation of spatial regression models," Agricultural Economics, Blackwell, vol. 27(3), pages 247-267, November.
    12. Kelejian, Harry H & Prucha, Ingmar R, 1999. "A Generalized Moments Estimator for the Autoregressive Parameter in a Spatial Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(2), pages 509-533, May.
    13. Kathleen P. Bell & Nancy E. Bockstael, 2000. "Applying the Generalized-Moments Estimation Approach to Spatial Problems Involving Microlevel Data," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 72-82, February.
    14. V. Heinrich Amavilah, 2003. ""Does Trade Cause Growth?" - A Comment," GE, Growth, Math methods 0307001, University Library of Munich, Germany.
    15. Magrini, Stefano, 2004. "Regional (di)convergence," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 62, pages 2741-2796, Elsevier.
    16. Pritchett, Lant, 2003. "Comment on: Institutions, trade, and growth," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 163-165, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Guyslain K. Ngeleza & Raymond J.G.M. Florax & William A. Masters, 2006. "Geographic And Institutional Determinants Of Real Income:A Spatio-Temporal Simultaneous Equation Approach," Working Papers 06-15, Purdue University, College of Agriculture, Department of Agricultural Economics.
    2. Capolupo, Rosa, 2009. "The New Growth Theories and Their Empirics after Twenty Years," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 3, pages 1-72.
    3. Stimpfle, Alexander & Stadelmann, David, 2015. "The Impact of Fundamental Development Factors on Different Income Groups: International Evidence," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113128, Verein für Socialpolitik / German Economic Association.
    4. Alvar Kangur, 2016. "What Rules in the ‘Deep’ Determinants of Comparative Development?," Research in Economics and Business: Central and Eastern Europe, Tallinn School of Economics and Business Administration, Tallinn University of Technology, vol. 8(1).
    5. Diego A. Cerdeiro & Andras Komaromi, 2021. "Trade and income in the long run: Are there really gains, and are they widely shared?," Review of International Economics, Wiley Blackwell, vol. 29(4), pages 703-731, September.
    6. James Fenske, 2014. "Ecology, Trade, And States In Pre-Colonial Africa," Journal of the European Economic Association, European Economic Association, vol. 12(3), pages 612-640, June.
    7. Dawood Mamoon & S. Mansoob Murshed, 2009. "Want economic growth with good quality institutions? Spend on education," Education Economics, Taylor & Francis Journals, vol. 17(4), pages 445-468.
    8. Blaise Gnimassoun & C. John Anyanwu, 2018. "The Diaspora And Economic Development In Africa," Working Papers hal-04141793, HAL.
    9. Matthias Busse & José L. Groizard, 2008. "Technology Trade in Economic Development," The World Economy, Wiley Blackwell, vol. 31(4), pages 569-592, April.
    10. Edmonds, Eric V. & Pavcnik, Nina, 2006. "International trade and child labor: Cross-country evidence," Journal of International Economics, Elsevier, vol. 68(1), pages 115-140, January.
    11. Blaise Gnimassoun & John C. Anyanwu, 2019. "The Diaspora and economic development in Africa," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 155(4), pages 785-817, November.
    12. Mehmet Ugur & David Sunderland, 2011. "Does Economic Governance Matter? New Contributions to the Debate," Chapters, in: Mehmet Ugur & David Sunderland (ed.), Does Economic Governance Matter?, chapter 1, Edward Elgar Publishing.
    13. Sambit Bhattacharyya & Steve Dowrick & Jane Golley, 2009. "Institutions and Trade: Competitors or Complements in Economic Development?," The Economic Record, The Economic Society of Australia, vol. 85(270), pages 318-330, September.
    14. M. Ayhan Kose & Eswar Prasad & Kenneth Rogoff & Shang-Jin Wei, 2009. "Financial Globalization: A Reappraisal," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 56(2), pages 143-197.
    15. Raphael A. Auer, 2013. "Geography, institutions, and the making of comparative development," Journal of Economic Growth, Springer, vol. 18(2), pages 179-215, June.
    16. Bhattacharyya, Sambit, 2009. "Unbundled institutions, human capital and growth," Journal of Comparative Economics, Elsevier, vol. 37(1), pages 106-120, March.
    17. Raphael A. Auer, 2008. "The Colonial and Geographic Origins of Comparative Development," Working Papers 2008-08, Swiss National Bank.
    18. Ann-Sofie Isaksson, 2011. "Social divisions and institutions: assessing institutional parameter variation," Public Choice, Springer, vol. 147(3), pages 331-357, June.
    19. Oyèkọ́lá, Ọláyínká, 2021. "Where do people live longer?," Research in Economics, Elsevier, vol. 75(1), pages 21-44.
    20. Barbara Dettori & Emanuela Marrocu & Raffaele Paci, 2012. "Total Factor Productivity, Intangible Assets and Spatial Dependence in the European Regions," Regional Studies, Taylor & Francis Journals, vol. 46(10), pages 1401-1416, November.

    More about this item

    Keywords

    economic growth; Geography; Institutions; simultaneous equations; spatial econometrics; trade;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fpr:ifprid:1082. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/ifprius.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.