Cultural Environment and Institutional Transplant: Insights from Nineteenth-Century Prussia

Location
University House - Room 205
Dates
Thursday 4th February 2016 (12:00-13:00)
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Speaker: Dr. GianPaolo Lecce (Bocconi University)

Speaker Biography

Giampaolo is a Ph.D. candiate at Università Bocconi. He is especially interested in political economics and applied microeconomics. His research studies the interactions among institutional transplants, cultural values, and economics growth and the analysis of the incentives of voters and politicians. 

His studies demonstrate how the mediation of culture may cancel out the positive effect on economic growth of an imported institution after an institutional transplant. Giampaolo works also on fiscal policies, in a joint paper with Alberto Alesina and Dorian Carloni, he provides evidence that governments that reduce budget deficits even decisively are not systematically voted out of office. 

Abstract

The economic impact of an institutional transplant depends on the underlying cultural environment of the receiving country. This paper provides the first evidence that the positive effect of importing good institutions cancels out when the receiving territories are characterized by cultural traits in conflict with those embedded in the imported institutions. We identify this result using county-level data from late nineteenth-century Prussia. This environment allows us to exploit both the quasi-natural experiment generated by the radical Napoleonic institutional reforms and the deeply rooted cultural heterogeneity across Prussian counties.

First, using religious affiliation as a proxy of cultural commonality, we find no effect of French institutions in Protestant areas. Then, using hand-collected data on pre-Napoleonic reigns we show that kingdoms with stronger ties to French culture exhibit a more effective transplant even when controlling for institutional proximity. Our findings are consistent with the hypothesis that cultural compatibility between the country exporting the institution and the receiving areas is a significant determinant of a successful transplant.