An empirical study of the limits and perspectives of institutional transfers

The aim of this paper is to determine which country-specific characteristics promote and which impede the adoption of institutions. On the basis of a broad panel of 183 countries for the period between 1996 and 2010, we test whether there are tendencies towards a general improvement and towards a convergence of institutional quality. Based on the hypothesis that younger countries tend to adopt the smoothly functioning institutions of older ones, we ana-lyze which of the younger countries have good institutions and why. Among other things, we found that older countries do have better institutions than younger ones, but it is questionable that there is a causal effect. Moreover, the results of our empirical investigation show that having been a UK colony or the degree of economic openness have no effect on the institu-tional quality; while on the other hand, religion, region and dependency on natural resources do indeed have such effects. In addition, the potential role of international organizations with regard to nation building and institutional transfer is discussed.