Econometrics Institutions and Growth

Masters
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Politics
Pages 11 (2761 words)
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This paper analysis the differences in economic performance with reference to institutions and property right, previous study such as that undertaken by Acemoglu (2001) show that colonialism led to the introduction of institutions that aid in improving performance, further this paper highlights differences in economic performance and the role played by different settlers in these countries, this is evident from a study by Lange (2006) which stated that British institutions were better than those of Spain whereby British colonised territories had positive effects after colonisation.

Introduction


This paper focuses on the reasons why some countries are wealthier than others, studies such as Daron Acemoglu (2001) focus on colonisation and its effect on institutions. They state that colonisation led to the introduction of institutions which are present today, these institutions are therefore contributed to better economic performance. The role of better institutions in economic performance is supported by North (1973) who states that better institutions would lead to more investment in human capital and this would result into better economic performance will be realised.
Besley (1995) studied the relationship between property rights and output and identified that there was strong correlation between the two variables, therefore economic performance will also depends on property rights. In this paper we focus on the role of colonisation and establishment of institutions, we also discuss the effect of property right on GDP and the differences in economic performance and the colonisers of the various countries.
A study by Acemoglu (2001) was based on three assumpti ...
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