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Geography vs. Institutions Revisited: Were Fortunes Reversed?

by Adam Przeworski. Reading for week of June 6, 2006.

I review the controversy over the roles of geography and institutions in economic development.  Using the new data set of Maddison (2003) shows that the only major reversal of fortunes consisted of four British offshoots passing the income levels of the rest of the world:  a finding which, in my view, casts doubts on the importance of institutions.  I argue that statistical analyses of the impact of institutions must exploit the full temporal information, with the obvious difficulty of finding instruments.

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