What Determines Rule of Law? An Empirical Investigation of Rival Models


  • Gustav Hansson

    1. Department of Economics, University of Gothenburg, Box 640, SE-40530 Gothenburg, Sweden
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    • * PhD, Department of Economics, University of Gothenburg, Box 640, SE-40530 Gothenburg, Sweden. gustav.hansson@economics.gu.se A previous version of this paper has been circulated with the name “Same Same but Different? A Comparison of Institutional Models.” I would like to thank Arne Bigsten, Steven Block, Dick Durevall, Anders Fredriksson, Annika Lindskog, Ola Olsson, Sven Tengstam, and seminar participants at the Nordic Conference in Development Economics 07 and at the University of Gothenburg for helpful comments. All errors are my own.


In the growing literature on the creation of institutions, the theories emphasizing colonial origin (Mauro, 1995), legal origin and religious affiliation (La Porta et al., 1999), Western European influence (Hall and Jones, 1999), and settler mortality (Acemoglu et al., 2001), have been especially influential. The validity and influence of these studies rests heavily on empirical modeling, which, since the theories are obviously closely related, might actually capture the same primary mechanism. It is therefore unclear whether the empirical relationships found are the same or if they are different. Therefore, this paper takes the empirical models seriously in order to discriminate among the existing models and to identify the model and variables that best explain the variation in institutional quality. The aim of this paper is thus to provide answers to the following questions: (i) Is there one model which explains more of the variation in institutional quality than the other models? (ii) Do these models capture the same information? And (iii), if we let the information in the data decide, which combination of variables would be selected?