A Review of Institutions Rule

Seminar paper from the year 2015 in the subject Business economics - Economic Policy grade: 17 Technical University of Darmstadt (Fachgebiet Internationale Wirtschaft) language: English abstract: Rodrik Subramanian and Trebbi (2002) contribute to the discussion on the impact of geography institutions and international trade on cross-national differences in income levels. They find that only institutions exert a significant direct impact on incomes. Meanwhile international trade has no direct effect and geography has at best weak direct effects on incomes. Examining its empirical framework I find that the way the study measures geography is inadequate and that the framework therefore does not treat the three deeper determinants equally in the sense of giving the geography-hypothesis a smaller chance to prevail. Based on this finding the underlying structure is adjusted and developed further to provide an improved basis for future analyses.