Institutional Convergence: Exit or Voice?

No 15-40, Working Papers from Department of Economics, West Virginia University

Abstract: There is a small but growing literature on the determinants of economic freedom. In this paper I contribute to this literature in two ways. First, I empirically show that Beta-convergence in economic freedom occurred from 1980 to 2010. Countries with low levels of economic freedom in 1980 "catch up" at a rate of 0.7 percent a year on average, ceteris paribus. Second, I document the structural characteristics that contribute to this institutional convergence. My conditional convergence estimates suggest democratic institutions do not contribute to conditional convergence. Exitability, a variable that captures how easy it is for citizens to "vote with their feet" is related to the change in economic freedom from 1980 to 2010 in a statistically significant manner across all specifications. This provides some to the importance of "exit" versus "voice" with respect to the question of institutional change.

Keywords: Convergence; Economic Freedom; Institutional Change; Democracy; Exit (search for similar items in EconPapers)
JEL-codes: O1 O43 P1 P48 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2015-09
New Economics Papers: this item is included in nep-cdm
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Citations: View citations in EconPapers (5)

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Journal Article: Institutional convergence: exit or voice? (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:wvu:wpaper:15-40

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