Initial Conditions, Institutional Dynamics and Economic Performance: Evidence from the American States

Daniel Berkowitz and Karen Clay

William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: Using state-level data from the United States, we find that differences in colonial legal institutions affect the current quality of state legal institutions. These differences in colonial legal institutions arose because some states were settled by Great Britain, a common law country, and other states were settled by France, Spain, and Mexico, all civil law countries. To explain these findings, we develop a transplant-civil law hypothesis that highlights the disruption associated with large-scale legal transplantation and the possible relative inefficiencies of colonial civil law. We find strong support for the transplant-civil law hypothesis. Our results are robust to inclusion of additional variables capturing climate, geography, initial population and resource endowments. Given the 150-200 year gap between the initial conditions and the measures of the current quality of legal institutions, we provide indirect evidence on the persistence of legal institutions. We then use initial legal systems and climate to quantify the substantial impact of current institutions on current economic performance.

Keywords: common law; civil law; transplant; initial conditions; state courts and public corruption (search for similar items in EconPapers)
JEL-codes: K4 O1 P1 (search for similar items in EconPapers)
Pages: 62 pages
Date: 2003-09-01
New Economics Papers: this item is included in nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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