@techreport{Falkinger2004Institutions,
abstract = {This paper argues that openness to goods trade in combination with an unequal distribution of
political power has been a major determinant of the comparatively slow development of
resource- or land-abundant regions like South America and the Caribbean in the nineteenth
century. We develop a two-sector general equilibrium model with a tax-financed public
sector, and show that in a feudal society (dominated by landed elites) productivity-enhancing
public investments like the provision of schooling are typically lower in an open than in a
closed economy. Moreover, we find that, under openness to trade, development is faster in a
democratic system. We also endogenize the trade regime and demonstrate that, in political
equilibrium, a land-abundant and landowner-dominated economy supports openness to trade.
Finally, we discuss empirical evidence which strongly supports our basic hypotheses.},
author = {Josef Falkinger and Volker Grossmann},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {O10; N16; N10; F43; H50; 330; economic development; institutions; political system; public education; trade; Entwicklung; Politik der offenen T\"{u}r; Au\ss{}enwirtschaftspolitik; Politisches System; Theorie; Welt},
language = {eng},
number = {1279},
title = {Institutions and development : the interaction between trade regime and political system},
type = {CESifo working papers},
url = {http://hdl.handle.net/10419/18917},
year = {2004}
}
