Dani Rodrik

Bio: Dani Rodrik is an academic researcher from Harvard University. The author has contributed to research in topics: Globalization & Free trade. The author has an hindex of 120, co-authored 383 publications receiving 74328 citations. Previous affiliations of Dani Rodrik include Princeton University & Columbia University.

Institutions Rule: The Primacy of Institutions over Geography and Integration in Economic Development

Abstract: We estimate the respective contributions of institutions, geography, and trade in determining income levels around the world, using recently developed instrumental variables for institutions and trade. Our results indicate that the quality of institutions “trumps” everything else. Once institutions are controlled for, conventional measures of geography have at best weak direct effects on incomes, although they have a strong indirect effect by influencing the quality of institutions. Similarly, once institutions are controlled for, trade is almost always insignificant, and often enters the income equation with the “wrong” (i.e., negative) sign. We relate our results to recent literature, and where differences exist, trace their origins to choices on samples, specification, and instrumentation.

Distributive Politics and Economic Growth

Abstract: A crude distinction between economics and politics would be that economics is concerned with expanding the pie while politics is about distributing it. In this paper we analyze the relationship between the two. We focus on how an economy's initial configuration of resources shapes the political struggle for income and wealth distribution, and how that, in turn, affects long-run growth. Our main conclusion is that inequality is conducive to the adoption of growth-retarding policies. We derive this result from a simple political-economy model of growth, and present cross-country evidence consistent with it. The key feature of our model is that individuals differ in their relative factor endowments. We distinguish between two types of factors: an accumulated factor (called "capital") and a nonaccumulated factor (called "labor"). Growth is driven by the expansion of the capital stock, which is in turn determined by individual saving decisions. Long-run growth is endogenous, as the aggregate production function is taken to be linearly homogeneous in capital and (productive) government services taken together. The provision of government services is financed by a tax on capital. Because government services are productive, a "small" tax on

Trade Policy and Economic Growth: A Skeptic's Guide to the Cross-National Evidence

Abstract: Do countries with lower policy-induced barriers to international trade grow faster, once other relevant country characteristics are controlled for? There exists a large empirical literature providing an affirmative answer to this question. We argue that methodological problems with the empirical strategies employed in this literature leave the results open to diverse interpretations. In many cases, the indicators of openness used by researchers are poor measures of trade barriers or are highly correlated with other sources of bad economic performance. In other cases, the methods used to ascertain the link between trade policy and growth have serious shortcomings. Papers that we review include those by Dollar (1992), Ben-David (1993), Sachs and Warner (1995), Edwards (1998), and Frankel and Romer (1999). We find little evidence that open trade policies-in the sense of lower tariff and nontariff barriers to trade-are significantly associated with economic growth.

Why Do More Open Economies Have Bigger Governments

Abstract: This paper demonstrates that there is a robust empirical association between the extent to which an economy is exposed to trade and the size of its government sector. This association holds for a large cross-section of countries, in low- as well as high-income samples, and is robust to the inclusion of a wide range of controls. The explanation appears to be that government consumption plays a risk-reducing role in economies exposed to a significant amount of external risk. When openness is interacted with explicit measures of external risk, such as terms-of-trade uncertainty and product concentration of exports, it is the interaction terms that enter significantly, and the openness term that loses significance (or turns negative). The paper also demonstrates that government consumption is the ‘safe’ activity, in the empirically relevant sense, in the vast majority of countries.

Why do More Open Economies Have Bigger Governments

Abstract: There exists a positive correlation between an economy's exposure to international trade and the size of its government. The correlation holds for most measures of government spending, in low‐as well as high‐income samples, and is robust to the inclusion of a wide range of controls. One explanation is that government spending plays a risk‐reducing role in economies exposed to a significant amount of external risk. The Paper provides a range of evidence consistent with this hypothesis. In particular, the relationship between openness and government size is strongest when terms‐of‐trade risk is highest.

A Brief History of Neoliberalism

Abstract: Introduction 1 Freedom's Just Another Word 2 The Construction of Consent 3 The Neoliberal State 4 Uneven Geographical Developments 5 Neoliberalism with 'Chinese Characteristics' 6 Neoliberalism on Trial 7 Freedom's Prospect Notes Bibliography Index