The historical economics of corruption and development within Italy

Ilaria Petrarca and Roberto Ricciuti

International Journal of Monetary Economics and Finance, 2013, vol. 6, issue 2/3, 186-202

Abstract: We investigate the relationship between corruption and economic performance, focusing on the historical roots of the former. We claim that a sequential mechanism linking history to development exists: first, history defines the quality of social capital; then, social capital determines the level of corruption; finally, corruption affects economic performance. We empirically test this hypothesis on a dataset of Italian provinces, and address the possible endogeneity of corruption by applying an IV model. We use three sets of historical instruments for corruption: 1) foreign dominations that ruled Italian regions between the 16th and 17th century; 2) autocracy/autonomous rule in the 14th century; 3) an index of social capital between the end of the 19th and at the onset of the 20th century. The results confirm the validity of the set of instruments (2) and (3), and indicate a significant impact of historically driven corruption on development.

Keywords: corruption; economic development; institutions; social capital; history; historical economics; Italy. (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (2)

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