EconPapers    
Economics at your fingertips  
 

Institutions vs. Social Interactions in Driving Economic Convergence: Evidence from Colombia

Michele Coscia (), Timothy Cheston () and Ricardo Hausmann ()
Additional contact information
Michele Coscia: Center for International Development at Harvard University
Timothy Cheston: Center for International Development at Harvard University

No 331, CID Working Papers from Center for International Development at Harvard University

Abstract: Are regions poor because they have bad institutions or are they poor because they are disconnected from the social channels through which technology diffuses? This paper tests institutional and technological theories of economic convergence by looking at income convergence across Colombian municipalities. We use formal employment and wage data to estimate growth of income per capita at the municipal level. In Colombia, municipalities are organized into 32 departamentos or states. We use cellphone metadata to cluster municipalities into 32 communication clusters, defined as a set of municipalities that are densely connected through phone calls. We show that these two forms of grouping municipalities are very different. We study the effect on municipal income growth of the characteristics of both the state and the communication cluster to which the municipality belongs. We find that belonging to a richer communication cluster accelerates convergence, while belonging to a richer state does not. This result is robust to controlling for state fixed effects when studying the impact of communication clusters and vice versa. The results point to the importance of social interactions rather than formal institutions in the growth process.

New Economics Papers: this item is included in nep-gro, nep-lam and nep-ure
Date: 2017-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
http://growthlab.cid.harvard.edu/files/growthlab/f ... rgence_cidwp_331.pdf (application/pdf)

Related works:
Working Paper: Institutions vs. Social Interactions in Driving Economic Convergence: Evidence from Colombia (2017) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cid:wpfacu:331

Access Statistics for this paper

More papers in CID Working Papers from Center for International Development at Harvard University 79 John F. Kennedy Street. Contact information at EDIRC.
Bibliographic data for series maintained by Chuck McKenney ().

 
Page updated 2019-10-17
Handle: RePEc:cid:wpfacu:331