Journal of Economic Growth

, Volume 7, Issue 4, pp 347–369 | Cite as

States and Markets: The Advantage of an Early Start

  • Valerie Bockstette
  • Areendam Chanda
  • Louis Putterman


In this paper, an index of the depth of experience with state-level institutions, or state antiquity, is derived for a large set of countries. We show that state antiquity is significantly correlated with measures of political stability and institutional quality, with income per capita, and with the rate of economic growth between 1960 and 1995. State antiquity contributes significantly to the explanation of differences in growth rates, explaining half of the differences in growth rates between countries like China and Mauritania, which are located at the two ends of the spectrum. It is also a good instrument for “social infrastructure,” which explains cross-country differences in worker productivity.

economic growth economic development comparative economic systems 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Abramovitz, M. (1986). “Catching Up, Forging Ahead, and Falling behind,” Journal of Economic History 46, 385–406.Google Scholar
  2. Acemoglu, D., S. Johnson, and J. Robinson. (2001). “The Colonial Origins of Comparative Development: An Empirical Investigation,” American Economic Review 91(5), 1369–1401.Google Scholar
  3. Acemoglu, D., S. Johnson, and J. Robinson. (2002). “Reversal of Fortune: Geography and Institutions in the Making of the Modern World Income Distribution,” Quarterly Journal of Economics 117(4), in press.Google Scholar
  4. Adelman, I., and C. T. Morris. (1967). Society, Politics and Economic Development. Baltimore: Johns Hopkins University Press.Google Scholar
  5. Alfaro, L. et al. (2001). “FDI and Economic Growth: The Role of Local Financial Markets.” Harvard Business School Working Paper 2001–083.Google Scholar
  6. Aron, J. (1999). “Growth and Institutions: A Review of the Evidence,” World Bank Research Observer 15(1), 99–135.Google Scholar
  7. Banks, A. (1994). “Cross-National Time Series Data Archive.” Center for Social Analysis, SUNY Binghamton.Google Scholar
  8. Barro, R. (1991). “Economic Growth in a Cross-Section of Countries,” Quarterly Journal of Economics 106, 407–444.Google Scholar
  9. Barro, R., and Jong-Wha Lee. (1994). “Sources of Economic Growth,” Carnegie-Rochester Conference Series on Public Policy 40(0), 1–46.Google Scholar
  10. Beck, T., R. Levine, and N. Loayza. (2000). “Finance and the Sources of Growth,” Journal of Financial Economics 58, 261–300.Google Scholar
  11. Boserup, E. (1965). Conditions of Agricultural Growth: The Economics of Agricultural Change Under Population Pressure. New York: Aldine.Google Scholar
  12. Burkett, J., C. Humblet, and L. Putterman. (1999). “Pre-Industrial and Post-War Economic Development: Is There a Link?” Economic Development and Cultural Change 47(3), 471–495.Google Scholar
  13. Chanda, A., and L. Putterman. (2000). “Economic Growth, Social Capability, and Pre-Industrial Development,” a report to the World Bank Africa Region Technical Families, Macroeconomics 2, October.Google Scholar
  14. Coleman, J. (1988). “Social Capital in the Creation of Human Capital,” American Journal of Sociology 94, S95–S120.Google Scholar
  15. Dasgupta, P. (1998). “Economic Development and the Idea of Social Capital.” In P. Dasgupta, and I. Seralgeldin (eds), Social Capital: Integrating the Economist's and the Sociologist's Perspectives. Washington, D.C.: The World Bank.Google Scholar
  16. Diamond, J. (1998). Guns, Germs and Steel: The Fates of Human Societies. New York: W.W. Norton.Google Scholar
  17. Easterly, W., and R. Levine. (1997). “Africa's Growth Tragedy: Policies and Ethnic Divisions,” Quarterly Journal of Economics 112, 1203–1246.Google Scholar
  18. Frankel, J. A., and D. Romer. (1999). “Does Trade Cause Growth?” American Economic Review 89(3), 379–399.Google Scholar
  19. Gallup, J.-L., J. Sachs, and A. Mellinger. (1999). “Geography and Economic Development,” International Regional Science Review 22(2), 179–232.Google Scholar
  20. Galor, O., and D. N. Weil. (2000). “Population, Technology and Growth: From Malthusian Stagnation to the Demographic Transition and Beyond,” American Economic Review 90(4), 806–828.Google Scholar
  21. Goodfriend, M., and J. McDermott. (1995). “Early Development,” American Economic Review 85(1), 116–133.Google Scholar
  22. Hall, R. E., and Jones, C. I. (1999). “Why Do Some Countries Produce So Much More Output per Worker Than Others?” The Quarterly Journal of Economics 114, 83–116.Google Scholar
  23. Kaufmann, D., A. Kraay, and P. Zoida-Lobaton (1999). “Governance Matters.” Unpublished paper. The World Bank, August.Google Scholar
  24. Klenow, P. J., and Andres Rodriguez-Clare. (1997). “The Neo-Classical Growth Revival in Economics: Has It Gone Too Far?” NBER Macroeconomics Annual. Cambridge and London: MIT Press, pp. 73–103.Google Scholar
  25. Knack, S., and P. Keefer. (1995). “Institutions and Economic Performance: Cross Country Tests Using Alternative Institutional Measures,” Economics and Politics 7, 207–227.Google Scholar
  26. Knack, S., and P. Keefer. (1997). “Does Social Capital Have an Economic Payoff? A Cross-Country Investigation,” Quarterly Journal of Economics 112, 1251–1288.Google Scholar
  27. La Porta, R., et al. (1997). “Legal Determinants of External Finance,” Journal of Finance 52, 1131–1150.Google Scholar
  28. La Porta, R., et al. (1998). “Law and Finance,” Journal of Political Economy 106, 1113–1155.Google Scholar
  29. Levine, R., N. Loayza, and T. Beck. (2000). “Financial Intermediation and Growth: Causality and Causes,” Journal of Monetary Economics 46(1), 31–77.Google Scholar
  30. Levine, R., and D. Renelt. (1992). “A Sensitivity Analysis of Cross-Country Growth Regressions,” American Economic Review 82, 942–963.Google Scholar
  31. Loury, G. (1977). “A Dynamic Theory of Racial Income Differences.” In P. A. Wallace, and A. Le Mund (eds), Women, Minorities and Employment Discrimination. Lexington, MA: Lexington Books.Google Scholar
  32. Mankiw, G. N., D. Romer, and D. N. Weil. (1992). “A Contribution to the Empirics of Economic Growth,” Quarterly Journal of Economics 107(2), 407–437.Google Scholar
  33. Mauro, P. (1995). “Corruption and Growth,” Quarterly Journal of Economics 110, 681–712.Google Scholar
  34. Narayan, D. (1997). “Voices of the Poor: Poverty and Social Capital in Tanzania.” Environmentally and Socially Sustainable Development Studies and Monographs Series 20, The World Bank.Google Scholar
  35. Olsson, O., and D. A. Hibbs, Jr. (2002). “Biogeography and Long-Run Economic Development.” Forthcoming European Economic Review.Google Scholar
  36. Putnam, R, with Robert Leonardi, and Raffaella Nanetti. (1993). Making Democracy Work: Civic Traditions in Modern Italy. Princeton, NJ: Princeton University Press.Google Scholar
  37. Putterman, L. (2000). “Can an Evolutionary Approach to Development Predict Post-War Economic Growth?” Journal of Development Studies 36(3), 1–30.Google Scholar
  38. Sachs, J., and A. Warner. (1997). “Sources of Slow Growth in African Economies,” Journal of African Economies 6(3), 335–376.Google Scholar
  39. Temple, J. (1998). “Initial Conditions, Social Capital and Growth in Africa,” Journal of African Economies 7(3), 309–347.Google Scholar
  40. Temple, J., and P. A. Johnson. (1998). “Social Capability and Economic Growth,” Quarterly Journal of Economics 113(3), 965–990.Google Scholar
  41. World Bank. (1997). World Development Report 1997: The State in a Changing World. Washington, D.C.: The World Bank.Google Scholar

Copyright information

© Kluwer Academic Publishers 2002

Authors and Affiliations

  • Valerie Bockstette
  • Areendam Chanda
    • 1
  • Louis Putterman
    • 2
  1. 1.Department of EconomicsNorth Carolina State UniversityRaleigh
  2. 2.Department of EconomicsBrown UniversityProvidence

Personalised recommendations