Colonisation, formal and informal institutions, and development

This article analyses current attempts to identify the factors underlying long-term economic growth. The author criticises some the arguments and historical proofs in which are based the two main explanations which dominate recent literature: the institutional approach and those which focus on the importance of geographical factors. Using an approach which is deliberately eclectic, the author considers the role of geography, international trade, human capital and institutional quality in explaining development. A new estimation is carried out through TLSL with instrumental variables. The results of the empirical model confirm the central role of institutions in long-term economic growth. However, certain geographical conditions also seem to have influenced countries´ possibilities of progress. Human capital and trade openness are less robust in explaining economic growth.