1. Institutional convergence: exit or voice?
- Author
-
Joshua C. Hall
- Subjects
Economics and Econometrics ,Public economics ,Convergence, Economic Freedom, Institutional Change, Democracy, Exit ,Institutional change ,Ceteris paribus ,Conditional convergence ,media_common.quotation_subject ,05 social sciences ,Convergence (economics) ,jel:P1 ,jel:O1 ,Democracy ,0506 political science ,Economic freedom ,Variable (computer science) ,0502 economics and business ,jel:O43 ,050602 political science & public administration ,Economics ,jel:P48 ,Demographic economics ,050207 economics ,Finance ,media_common - Abstract
There is a small but growing literature on the determinants of economic freedom. This paper contributes to this literature in two ways. First, it is empirically shown that β-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, the structural characteristics that contribute to this institutional convergence are documented. Conditional convergence estimates suggest democratic institutions do not con- tribute 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 preliminary evidence as to the importance of “exit” versus “voice” with respect to the question of institutional change.
- Published
- 2015