Corresponding author: Emanuel Ornelas, Managerial Economics and Strategy Group, London School of Economics, Houghton Street, London WC2A 2AE, UK. E-mail: firstname.lastname@example.org. We thank Kyle Bagwell, Paola Conconi, Luis Garicano, Alberto Trejos and especially Bob Staiger and two anonymous referees for comments and suggestions. We also thank seminar participants at ECARES, Erasmus University, Norwegian School of Economics, Tübingen, Nottingham, the 2008 CEP Annual Conference, the 2008 ELSNIT Conference and the 2008 Conference on Trade and Institutions at Seoul National University for their comments. Nathan Converse provided helpful research assistance. Ornelas gratefully acknowledges support from the SCIFI-GLOW project
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