Do Institutions Trump Everything Else?: The Essay of Rodrik et al. (2004) Revisited

In this paper, we aim to estimate the independent effect of trade openness on the long-term growth performance of nations. The empirical methodology is based on two separate steps. In the first step, we will introduce an alternative methodology to estimate a more precise instrument for trade openness, using an extended hierarchical-longitudinal method, thereby enhancing the framework developed by Frankel and Romer [1999]. In the second step, we will estimate the growth effect of trade openness within an automatic selection framework for the income equation of nations, while accounting for the effects of institutions and geography.