Electoral Experience, Institutional Quality and Economic Development in Latin America

In a panel of 18 Latin American countries from 1900 to 2007, we test the degree to which institutions and geography affect country income. Using a new instrument, we find strong evidence that both institutions and geography are important determinants of country income. However, the penalty for economically unfavourable geography is much smaller than the potential benefits from good institutions. The coefficient estimates do not vary significantly when there are changes in the number of countries included in the analysis; the results for institutions are robust to the inclusion of country-fixed effects.