Domestic institutions, international trade and economic development.

Description

In this thesis, I study the relationship between countries' domestic institutions and international trade. Chapters 1 and 2 consider the effect that domestic institutions have on trade. In Chapter 1, I develop a model that illustrates how a country's ability to enforce written contracts can affect comparative advantage. I test the model and find that countries with better contracting environments tend to specialize production in contract-intense goods. In Chapter 2, I analyze how the pervasiveness of rent-seeking behavior in a country is reflected in the country's tariff policy. Chapters 3 to 5 consider the effect that increased openness to trade can have on domestic institutions. The three chapters study the opening of sub-Saharan Africa to trade, which began around 1450 AD. In Chapter 3, I provide a model that explains how extraction during the slave trade and colonial rule resulted in a permanent increase in rent-seeking behavior and a permanent decrease in the security of private property, both of which have helped foster Africa's current underdevelopment. In Chapter 4, I turn to the data and test for a link between the number of slaves exported from each country in Africa and subsequent institutional and economic development. I find that countries that exported large numbers of slaves during the slave trades are poorer today and exhibit slower rates of economic growth. The available evidence suggests that the importance of the slave trade for contemporary development is a result of its detrimental impact on the formation of domestic institutions, such as the security of private property, the quality of the judicial system, and the overall rule of law. In Chapter 5, I describe how I construct my estimates of the number of slaves taken from each country in Africa.

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