This paper presents an integrated overview of the literature linking institutions, financial development and economic growth. From the large body of research on institutional development, the paper first selects those contributions that make it possible to study the role of institutional...

Our paper presents a critical review of the literature on institutional change and the role of institutions in economic development. We discuss the roles and interrelationships of formal and informal institutions and introduce a collection of papers addressing this topic in a variety of...

This paper examines how a country's weak institutions and polarized government can affect the likelihood of its default on sovereign debt. Using a data set of 90 countries, it shows that strong institutions are associated with fewer sovereign default crises. In addition, when institutions are...

This paper explores endogenous institution formation under a catching-up strategy in developing countries. Since the catching-up strategy is normally against the compartive advantages of the developing countries, it can not be implemented through laissez-faire market mechanisms, and a government...

Institutions have gathered considerable interest as to their effects on international trade and growth. We model how weak institutions can reduce the returns to high quality products, thereby creating inefficiency, and we explore whether the ability to export to markets with strong institutions...

This paper explores endogenous institution formation under a catching-up strategy in developing countries. Since the catching-up strategy is normally against the comparative advantages of the developing countries, it can not be implemented through laissez-faire market mechanisms, and a...

This paper analyzes, both theoretically and empirically, the link between capital inflows and the quality of economic institutions. To this purpose, we construct a small-open economy model of the “soft budget constraint” syndrome wherein persistently cheap funding from abroad (i) raises the...

We propose and apply methods to quantify the impact of national institutions on international trade and development. We are able to identify the direct impact of country-specific institutions on international trade within the structural gravity framework. Our approach naturally addresses the...

The paper discusses how early economists, sometimes informed by Alexander Humboldt’s pioneer detailed report on a tropical country (Mexico), interpreted the connections between natural resources, institutions and growth. The apparent paradox of a negative relation between natural wealth and...

The hallmark of the recent development and growth literature is a quest to identify institutions that explain a significant portion of the observed differences in living standards across countries. Empirical work in the area focuses almost exclusively on either the global sample or on developing...