Legal Origins of Economic Development in Mexico


Galán, Juan Sebastián. Working Paper. “Legal Origins of Economic Development in Mexico”.


This paper investigates the persistent impacts of colonial legal institutions (or Reales Audiencias) in Mexico. Using a spatial regression discontinuity design, I find that areas with stronger colonial law enforcement capacity have experienced higher economic prosperity after Independence. Consistent with a popular Latin American hypothesis, historical data suggests the formal legal system has been more widely used to resolve disputes and conflicts have been less prevalent. Today, citizens exhibit higher trust in the law and the state, indicating a crowding in of norms of rule following. I argue more secure property rights and contracts encouraged financial intermediation and industrialization in the long-run.

Last updated on 10/31/2018