@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 = {H50; F43; N10; O10; N16; 330; economic development; institutions; political system; public education; trade; Entwicklung; Politik der offenen T\"{u}r; Aussenwirtschaftspolitik; Politisches System; Theorie; Welt},
language = {eng},
number = {1242},
title = {Institutions and Development : The Interaction between Trade Regime and Political System},
type = {IZA Discussion paper series},
url = {http://hdl.handle.net/10419/20506},
year = {2004}
}
