We examine spatial spillovers in institutional development. Dependent variables are institutional measures reflecting politics, law, and governmental administration. The explanatory variable of interest is the level of institutions in bordering countries—a spatial lag of the dependent variable. Our spatial model directly leads to the identification strategy for the endogenous spatial lag. We implement new results in spatial econometrics to counter missing-data problems usually rife in spatial empirics.
Spatial Spillovers in the Development of InstitutionsHarry H. Kelejian, Peter Murrell, and Oleksandr Shepotylo , ( 101 )
Journal of Development Economics