Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 997: More Open – Better Governed? Evidence from High- and Low-income Countries

Andreas Bergh (), Irina Mirkina and Therese Nilsson ()
Additional contact information
Andreas Bergh: Research Institute of Industrial Economics (IFN), Postal: and Department of Economics, Lund University
Irina Mirkina: IMT Institute for Advanced Studies
Therese Nilsson: Research Institute of Industrial Economics (IFN), Postal: and Department of Economics, Lund University

Abstract: Using World Bank data on institutional quality and the KOF Globalization Index, we examine over 100 countries from 1992 to 2010 to analyze the relationship between economic and social globalization and six measures of institutional quality. Theoretically, the incentives of elites to respond to globalization by improving institutions should differ between low-income and high-income countries. Empirically, increasing economic flows and social globalization are followed by improving institutions in rich countries, while the effect is the opposite for low-income countries. Previous findings of positive effects of trade on institutional quality are likely driven by rich countries.

Keywords: Globalization; Institutional quality; Developing countries

JEL-codes: F63; H83; O11

41 pages, December 16, 2013

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