DP9625 Geography, Transparency and Institutions

Author(s): Joram Mayshar, Omer Moav, Zvika Neeman
Publication Date: September 2013
Keyword(s): Geography, Institutions, Land Tenure, State Capacity, State Concentration, Transparency
JEL(s): D02, D82, H10, O43
Programme Areas: International Macroeconomics, Public Economics, Economic History
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=9625

We propose a theory by which geographic variations in the transparency of the production process explain cross-regional differences in the scale of the state, in its hierarchical structure, and in property rights over land. The key linkage between geography and these institutions, we posit, is via the effect of transparency on the state's extractive capacity. We apply our theory to explain institutional differences between ancient Egypt and ancient Upper and Lower Mesopotamia. We also discuss the relevance of our theory to analyses of the deep rooted factors affecting economic development and the growth of taxation in the modern age.