The Co-evolution of Institutions and Technology

We propose a model of growth driven by the co-evolution of institutions and technology. To be consistent with Douglass North (1990, 1991, 1994), institutions are defined as a type of collective knowledge about a specific environment that can prescribe how to adapt general technology before the latter can be actually used. Institutions, then, are treated as a factor in the innovation process, and as such can be purposely accumulated. The simultaneous accumulation of institutions and technology are modeled as an evolutionary game whereby boundedly-rational .rms choose how much to allocate to ‘institutional spending’ vis-a-vis research expenditures, in anticipation of changes in monopoly pro.ts from technological innovation. Using Taylor and Jonker’s (1978) Replicator Dynamics to describe the evolution of such strategies, we are able to show how this transition process converges to the steady state model of Romer (1990)

Shipwrecked by Rents

The trade route between Manila and Mexico was a monopoly of the Spanish Crown for more than 250 years. The Manila Galleons were “the richest ships in all the oceans”, but much of the wealth sank at sea and remain undiscovered. We introduce a newly constructed dataset of all of the ships that travelled this route. We show formally how monopoly rents that allowed widespread bribe-taking would have led to overloading and late ship departure, thereby increasing the probability of shipwreck. Empirically, we demonstrate not only that these late and overloaded ships were more likely to experience shipwrecks or to return to port, but that such effect is stronger for galleons carrying more valuable, higher-rent, cargo. This sheds new light on the costs of rent-seeking in European colonial empires

Growth, convergence and the co-evolution of institutions and technology

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Second-to-Fourth Digit Ratio and the Motivational Bases of Public Service

We report the findings of a study conducted in the Philippines in which we measured the second-to-fourth digit length ratio (2D:4D) and various psychometric instruments from a sample of youth interested in running for elective office in their communities (N = 567). We find that 2D:4D has a non-monotonic, quadratic (inverted-U) relationship with the Public Service Motivation index and the Big Five Inventory index for the male subjects in our sample, but not for the females. 2D:4D also has (linear) correlation with the Aspiration index both for males and females

When do Formal Rules and Informal Norms Converge?

We propose evolutionary dynamics to show how rules converge into norms. Individuals play a game of upholding or rejecting a rule, and the more they uphold the rule, the more it becomes established as a norm. We find that when individuals are rational, the initial state determines whether the rule converges into a norm; when individuals are boundedly rational, convergence occurs only if upholding rules is a risk-dominant strategy. This suggests why big-bang reforms that affect only the initial state can fail, while gradualist approaches that can sustain the risk dominance of upholding rules may be more effective.

Contagious Migration: Evidence from the Philippines

Outward migration data from the Philippines exhibit spatial clustering. This is likely due to information spillover effects--fellow migrants share information with other neighboring migrants, thereby lowering the costs of migration. To verify this, we use spatial econometrics to define a geography-based network of migrants and estimate its effect on the growth in the number of succeeding migrants. We find that current and past migration from one municipality induces contemporaneous and future migration in neighboring municipalities.migration, Philippines, fiduciary system, global imbalances, network effects, spatial econometrics

Contagious Migration : Evidence from the Philippines

Outward migration data from the Philippines exhibit spatial clustering. This is likely due to information spillover effects-­-fellow migrants share information with other neighboring migrants, thereby lowering the costs of migration. To verify this, we use spatial econometrics to define a geography-­based network of migrants and estimate its effect on the growth in the number of succeeding migrants. We find that current and past migration from one municipality induces contemporaneous and future migration in neighboring municipalities, even while controlling for demographic, economic and institutional factors that may be common across municipalities.