We estimate the respective contributions of institutions, geography, and trade in determining income levels around the world, using recently developed instruments for institutions and trade. Our results indicate that the quality of institutions 'trumps' everything else. Once institutions are...

Most conventional accounts of India’s recent economic performance associate the pick-up in economic growth with the liberalization of 1991. This Paper demonstrates that the transition to high growth occurred around 1980, a full decade before economic liberalization. We investigate a number of...

This paper furnishes robust evidence that the WTO has had a powerful and positive impact on trade, amounting to about 120% of additional world trade (or US$8 trillion in 2003 alone). The impact has, however, been uneven. This, in many ways, is consistent with theoretical models of the GATT/WTO....

A fundamental aspect of institutional design is how much society chooses to delegate unchecked power to its leaders. If, once elected, a leader cannot be restrained, society runs the risk of a tyranny of the majority, if not the tyranny of a dictator. If a leader faces too many ex post checks...

Is corruption systematically related to electoral rules? A number of studies have tried to uncover economic and social determinants of corruption but, as far as we know, nobody has yet empirically investigated how electoral systems influence corruption. We try to address this lacuna in the...

Despite the well known gains from trade, trade liberalization is one of the most politically contentious actions that a government can undertake. We propose and formalize a new explanation of this unpopularity. The explanation is based on uncertainty and is complementary to the usual...

There exists near-consensus among professional economists on the desirability of achieving macroeconomic stabilization prior to the removal of microeconomic distortions. Yet this advice was completely disregarded in some of the most important cases of reform during the last decade -- Bolivia and...

Why should multilateral lending exist in a world where private capital markets are well developed and governments have their own bilateral aid programmes? If lending by the World Bank, IMF, and regional development banks has an independent rationale, it must rest on advantages generated by the...

This paper argues that domestic social conflicts are a key to understanding why growth rates lack persistence and why so many countries have experienced a growth collapse after the mid-1970s. It emphasizes, in particular, the manner in which social conflicts interact with external shocks on the...

This paper opens with a discussion of the types of institutions that allow markets to perform adequately. While we can identify in broad terms what these are, there is no unique mapping between markets and the non-market institutions that underpin them. The paper emphasizes the importance of...