National Institutions and Regional Development at Borders: Evidence from the Americas
Francisco Gallego; César Huaroto; Cristóbal Otero y Alejandro Sáenz
Applied Economics, 2021. Vol. 53, Issue 2
Abstract: This paper explores how discontinuities created by national borders can influence development across the Americas. We exploit the discontinuous nature of borders jointly with exogenous variation at the national level to identify discontinuous effects on proxies for economic development at the regional and pixel levels. We separate the effects of national institutions from local historical conditions. Our analysis yields three main findings. First, we find important discontinuities in development across national borders for the Americas. Second, we also show that they are, for the most part, caused by institutional differences at the national level and not for differences at the regional level in geography, climate, endowments, and pre-colonization conditions. Third, we also present evidence that differences in national institutions affect human capital at the regional level.
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