Nothing Special   »   [go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/ecl/harjfk/rwp12-058.html
   My bibliography  Save this paper

Isolated Capital Cities and Misgovernance: Theory and Evidence

Author

Listed:
  • Campante, Filipe R.

    (Harvard University)

  • Do, Quoc-Anh

    (Sciences Po, Paris)

  • Guimaraes, Bernardo

    (Sao Paulo School of Economics)

Abstract
Motivated by a novel stylized fact--countries with isolated capital cities display worse quality of governance--we provide a framework of endogenous institutional choice based on the idea that elites are constrained by the threat of rebellion, and that this threat is rendered less effective by distance from the seat of political power. In established democracies, the threat of insurgencies is not a binding constraint, and the model predicts no correlation between isolated capitals and misgovernance. In contrast, a correlation emerges in equilibrium in the case of autocracies. Causality runs both ways: broader power sharing (associated with better governance) means that any rents have to be shared more broadly, hence the elite has less of an incentive to protect its position by isolating the capital city; conversely, a more isolated capital city allows the elite to appropriate a larger share of output, so the costs of better governance for the elite, in terms of rents that would have to be shared, are larger. We show evidence that this pattern holds true robustly in the data. We also show that isolated capitals are associated with less power sharing, a larger income premium enjoyed by capital city inhabitants, and lower levels of military spending by ruling elites, as predicted by the theory.

Suggested Citation

  • Campante, Filipe R. & Do, Quoc-Anh & Guimaraes, Bernardo, 2012. "Isolated Capital Cities and Misgovernance: Theory and Evidence," Working Paper Series rwp12-058, Harvard University, John F. Kennedy School of Government.
    • Handle: RePEc:ecl:harjfk:rwp12-058
    as

    Download full text from publisher

    File URL: https://research.hks.harvard.edu/publications/workingpapers/citation.aspx?PubId=8710&type=WPN
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Quamrul Ashraf & Oded Galor & Ömer Özak, 2010. "Isolation and Development," Journal of the European Economic Association, MIT Press, vol. 8(2-3), pages 401-412, 04-05.
    2. Nathan Nunn & Diego Puga, 2012. "Ruggedness: The Blessing of Bad Geography in Africa," The Review of Economics and Statistics, MIT Press, vol. 94(1), pages 20-36, February.
    3. Kevin Sheedy & Bernardo Guimaraes, 2011. "A model of equilibrium institutions," 2011 Meeting Papers 49, Society for Economic Dynamics.
    4. Edward Glaeser & Giacomo Ponzetto & Andrei Shleifer, 2007. "Why does democracy need education?," Journal of Economic Growth, Springer, vol. 12(2), pages 77-99, June.
    5. Timothy Besley & Torsten Persson, 2009. "The Origins of State Capacity: Property Rights, Taxation, and Politics," American Economic Review, American Economic Association, vol. 99(4), pages 1218-1244, September.
    6. Ernesto Dal Bó & Robert Powell, 2009. "A Model of Spoils Politics," American Journal of Political Science, John Wiley & Sons, vol. 53(1), pages 207-222, January.
    7. Davis, James C. & Henderson, J. Vernon, 2003. "Evidence on the political economy of the urbanization process," Journal of Urban Economics, Elsevier, vol. 53(1), pages 98-125, January.
    8. Philippe Aghion, 2005. "Growth and Institutions," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 32(1), pages 3-18, March.
    9. Campante, Filipe Robin & Do, Quoc-Anh, 2009. "A Centered Index of Spatial Concentration: Axiomatic Approach with an Application to Population and Capital Cities," Scholarly Articles 4481653, Harvard Kennedy School of Government.
    10. Filipe R. Campante & Quoc-Anh Do, 2014. "Isolated Capital Cities, Accountability, and Corruption: Evidence from US States," American Economic Review, American Economic Association, vol. 104(8), pages 2456-2481, August.
    11. Kaufmann, Daniel & Kraay, Aart, 2002. "Growth without governance," LSE Research Online Documents on Economics 123226, London School of Economics and Political Science, LSE Library.
    12. Claudio Ferraz & Frederico Finan, 2008. "Exposing Corrupt Politicians: The Effects of Brazil's Publicly Released Audits on Electoral Outcomes," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(2), pages 703-745.
    13. Filipe Campante & Edward L. Glaeser, 2018. "Yet another tale of two cities: Buenos Aires and Chicago," Latin American Economic Review, Springer;Centro de Investigaciòn y Docencia Económica (CIDE), vol. 27(1), pages 1-33, December.
    14. Baland, Jean-Marie & Moene, Karl Ove & Robinson, James A., 2010. "Governance and Development," Handbook of Development Economics, in: Dani Rodrik & Mark Rosenzweig (ed.), Handbook of Development Economics, edition 1, volume 5, chapter 0, pages 4597-4656, Elsevier.
    15. Acemoglu, Daron & Johnson, Simon & Robinson, James A., 2005. "Institutions as a Fundamental Cause of Long-Run Growth," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 6, pages 385-472, Elsevier.
    16. Daniel Kaufmann & Aart Kraay, 2002. "Growth without Governance," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2002), pages 169-230, August.
    17. Kaufmann, Daniel & Kraay, Aart & Mastruzzi, Massimo, 2010. "The worldwide governance indicators : methodology and analytical issues," Policy Research Working Paper Series 5430, The World Bank.
    18. Stasavage, David, 2010. "When Distance Mattered: Geographic Scale and the Development of European Representative Assemblies," American Political Science Review, Cambridge University Press, vol. 104(4), pages 625-643, November.
    19. Blundell,Richard & Newey,Whitney K. & Persson,Torsten (ed.), 2006. "Advances in Economics and Econometrics," Cambridge Books, Cambridge University Press, number 9780521871525, October.
    20. Alesina, Alberto & Özler, Sule & Roubini, Nouriel & Swagel, Phillip, 1996. "Political Instability and Economic Growth," Journal of Economic Growth, Springer, vol. 1(2), pages 189-211, June.
    21. Qi Li & Jeffrey Scott Racine, 2006. "Nonparametric Econometrics: Theory and Practice," Economics Books, Princeton University Press, edition 1, volume 1, number 8355.
    22. Qi Li & Jeffrey Scott Racine, 2006. "Density Estimation, from Nonparametric Econometrics: Theory and Practice," Introductory Chapters, in: Nonparametric Econometrics: Theory and Practice, Princeton University Press.
    23. Blundell,Richard & Newey,Whitney K. & Persson,Torsten (ed.), 2006. "Advances in Economics and Econometrics," Cambridge Books, Cambridge University Press, number 9780521692083, October.
    24. repec:hal:spmain:info:hdl:2441/7t0dp4mp8288lr2u6l7j8uk4li is not listed on IDEAS
    25. Alberto F. Ades & Edward L. Glaeser, 1995. "Trade and Circuses: Explaining Urban Giants," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(1), pages 195-227.
    26. World Bank, 2000. "World Development Indicators 2000," World Bank Publications - Books, The World Bank Group, number 13828.
    27. Filipe Campante & Quoc-Anh Do, 2010. "A Centered Index of Spatial Concentration: Expected Influence Approach," Working Papers hal-03460167, HAL.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Filipe R. Campante & Quoc-Anh Do, 2014. "Isolated Capital Cities, Accountability, and Corruption: Evidence from US States," American Economic Review, American Economic Association, vol. 104(8), pages 2456-2481, August.
    2. Filipe Campante & Quoc-Anh Do & Bernardo Guimaraes, 2014. "Capital Cities, Conflict, and Misgovernance: Theory and Evidence," Working Papers hal-03460261, HAL.
    3. repec:hal:spmain:info:hdl:2441/6ggbvnr6munghes9ocq36eaai is not listed on IDEAS
    4. Shaun Larcom & Mare Sarr & Tim Willems, 2018. "Dictators Walking the Mogadishu Line: How Men Become Monsters and Monsters Become Men," The World Bank Economic Review, World Bank, vol. 32(3), pages 584-609.
    5. repec:hal:spmain:info:hdl:2441/dambferfb7dfprc9lj6bo200k is not listed on IDEAS
    6. Filipe R. Campante & Quoc-Anh Do & Bernardo Guimaraes, 2019. "Capital Cities, Conflict, and Misgovernance," American Economic Journal: Applied Economics, American Economic Association, vol. 11(3), pages 298-337, July.
    7. repec:spo:wpmain:info:hdl:2441/dambferfb7dfprc9lj6bo200k is not listed on IDEAS
    8. Remi Jedwab & Adam Storeygard, 2019. "Economic and Political Factors in Infrastructure Investment: Evidence from Railroads and Roads in Africa 1960–2015," Economic History of Developing Regions, Taylor & Francis Journals, vol. 34(2), pages 156-208, May.
    9. Bernardo Guimaraes & Kevin D. Sheedy, 2017. "Guarding the Guardians," Economic Journal, Royal Economic Society, vol. 127(606), pages 2441-2477, November.
    10. Ali, Merima & Fjeldstad, Odd-Helge, 2023. "Pre-colonial centralization and tax compliance norms in contemporary Uganda," Journal of Institutional Economics, Cambridge University Press, vol. 19(3), pages 379-400, June.
    11. repec:spo:wpmain:info:hdl:2441/6ggbvnr6munghes9ocq36eaai is not listed on IDEAS
    12. repec:spo:wpecon:info:hdl:2441/dambferfb7dfprc9lj6bo200k is not listed on IDEAS
    13. repec:hal:wpspec:info:hdl:2441/dambferfb7dfprc9lj6bo200k is not listed on IDEAS

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:spo:wpmain:info:hdl:2441/4eh5eurum690ur8datvh2sb4g9 is not listed on IDEAS
    2. repec:hal:spmain:info:hdl:2441/3gffacsuvp8q9p62340u1dgcib is not listed on IDEAS
    3. repec:spo:wpecon:info:hdl:2441/3gffacsuvp8q9p62340u1dgcib is not listed on IDEAS
    4. repec:hal:spmain:info:hdl:2441/4eh5eurum690ur8datvh2sb4g9 is not listed on IDEAS
    5. repec:hal:spmain:info:hdl:2441/gac8g25hn9gdbnog775lou0p2 is not listed on IDEAS
    6. repec:hal:wpspec:info:hdl:2441/3gffacsuvp8q9p62340u1dgcib is not listed on IDEAS
    7. repec:spo:wpmain:info:hdl:2441/gac8g25hn9gdbnog775lou0p2 is not listed on IDEAS
    8. repec:spo:wpmain:info:hdl:2441/3gffacsuvp8q9p62340u1dgcib is not listed on IDEAS
    9. repec:hal:wpspec:info:hdl:2441/4eh5eurum690ur8datvh2sb4g9 is not listed on IDEAS
    10. repec:spo:wpecon:info:hdl:2441/4eh5eurum690ur8datvh2sb4g9 is not listed on IDEAS
    11. Filipe Campante & Quoc-Anh Do & Bernardo Guimaraes, 2014. "Capital Cities, Conflict, and Misgovernance: Theory and Evidence," Working Papers hal-03460226, HAL.
    12. Filipe R. Campante & Quoc-Anh Do & Bernardo Guimaraes, 2019. "Capital Cities, Conflict, and Misgovernance," American Economic Journal: Applied Economics, American Economic Association, vol. 11(3), pages 298-337, July.
    13. Filipe Campante & Quoc-Anh Do & Bernardo Guimaraes, 2014. "Capital Cities, Conflict, and Misgovernance: Theory and Evidence," Working Papers hal-03460261, HAL.
    14. repec:hal:journl:hal-03393227 is not listed on IDEAS
    15. repec:hal:spmain:info:hdl:2441/4hgajj9cf48dladkd9pn9jcj4p is not listed on IDEAS
    16. repec:spo:wpmain:info:hdl:2441/4hgajj9cf48dladkd9pn9jcj4p is not listed on IDEAS
    17. Campante, Filipe R. & Do, Quoc-Anh & Guimaraes, Bernardo, 2012. "Isolated Capital Cities and Misgovernance: Theory and Evidence," Working Paper Series rwp12-058, Harvard University, John F. Kennedy School of Government.
    18. Filipe R. Campante & Quoc-Anh Do & Bernardo Guimaraes, 2019. "Capital Cities, Conflict, and Misgovernance," American Economic Journal: Applied Economics, American Economic Association, vol. 11(3), pages 298-337, July.
    19. Filipe Campante & Quoc-Anh Do & Bernardo Guimaraes, 2014. "Capital Cities, Conflict, and Misgovernance: Theory and Evidence," SciencePo Working papers hal-03460261, HAL.
    20. repec:hal:spmain:info:hdl:2441/11auergscg875893gvc2mtel3q is not listed on IDEAS
    21. d'Agostino, Giorgio & Scarlato, Margherita, 2016. "Institutions, Innovation and Economic Growth in European Countries," MPRA Paper 72427, University Library of Munich, Germany.
    22. Ezcurra, Roberto & Zuazu, Izaskun, 2019. "Political equality and quality of government," MPRA Paper 96476, University Library of Munich, Germany.
    23. Simplice A. Asongu & Oasis Kodila-Tedika, 2018. "Determinants of Property Rights Protection in Sub-Saharan Africa," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 9(4), pages 1291-1308, December.
    24. Aleksynska, Mariya & Havrylchyk, Olena, 2013. "FDI from the south: The role of institutional distance and natural resources," European Journal of Political Economy, Elsevier, vol. 29(C), pages 38-53.
    25. Thomas Gall & Paolo Masella, 2012. "Markets and jungles," Journal of Economic Growth, Springer, vol. 17(2), pages 103-141, June.
    26. William Easterly, 2009. "Can the West Save Africa?," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 373-447, June.
    27. del Río, Fernando, 2018. "Governance, social infrastructure and productivity," MPRA Paper 86245, University Library of Munich, Germany, revised 16 Apr 2018.
    28. Dejene Mamo Bekana, 2021. "Innovation and Economic Growth in Sub-Saharan Africa: Why Institutions Matter? An Empirical Study Aross 37 Countries," Arthaniti: Journal of Economic Theory and Practice, , vol. 20(2), pages 161-200, December.
    29. Eicher, Theo S. & Schreiber, Till, 2010. "Structural policies and growth: Time series evidence from a natural experiment," Journal of Development Economics, Elsevier, vol. 91(1), pages 169-179, January.
    30. Filipe R. Campante & Quoc-Anh Do, 2014. "Isolated Capital Cities, Accountability, and Corruption: Evidence from US States," American Economic Review, American Economic Association, vol. 104(8), pages 2456-2481, August.
    31. Richard Bluhm & Christian Lessmann & Paul Schaudt, 2021. "The Political Geography of Cities," SoDa Laboratories Working Paper Series 2021-11, Monash University, SoDa Laboratories.
    32. Braunfels, Elias, 2016. "Further Unbundling Institutions," Discussion Paper Series in Economics 13/2016, Norwegian School of Economics, Department of Economics.
    33. Baland, Jean-Marie & Moene, Karl Ove & Robinson, James A., 2010. "Governance and Development," Handbook of Development Economics, in: Dani Rodrik & Mark Rosenzweig (ed.), Handbook of Development Economics, edition 1, volume 5, chapter 0, pages 4597-4656, Elsevier.
    34. Ang, James B. & Fredriksson, Per G., 2018. "State history, legal adaptability and financial development," Journal of Banking & Finance, Elsevier, vol. 89(C), pages 169-191.

    More about this item

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ecl:harjfk:rwp12-058. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/ksharus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.