The macroeconomics of institutions, fertility and social capital

This thesis consists of three empirical and theoretical chapters that aim to answer three main economic questions. The first chapter of this thesis is motivated by theoretical arguments (see e.g. Romer, 2010, Mokyr, 2007) that assert a positive impact of institutions on R&D, this paper aims to provide some empirical analysis on the relationship between the two variables. In particular, using a core sample of 98 countries over the period 1996-2009, this paper has found a significant direct effect of institutions on R&D intensity. Countries with better institutions qualities as captured by the World Banks’ Worldwide Governance Indicators (WGI) tend to attract more scientists and engineers into the research field and to spend more on R&D as well. This paper has also found evidence that the effect of institutions varies in different economies characterized by different levels of financial development and human capital accumulation, but stays relatively unchanged across countries with different levels of trade openness. The second chapter is motivated by the fact that several developing countries are currently experiencing a significant fertility decline; the advent of which is likely to bring these countries large economic benefits since high fertility is considered to be among the most important causes of underdevelopment. However, academic economists have paid very little attention to this transition. This paper seeks to explain the transition by infant mortality, urbanization, income, culture and educational attainment of females in their fertility age using annual data for 92 developing countries over the period 1960-2010. External instruments are used to deal with endogeneity. The reszults give intriguing insights into the demographic transition in the developing world. The last chapter is motivated by theoretical arguments (see e.g. Putnam, 2007) that assert a negative impact of ethnolinguistic diversity on social capital, this paper aims to provide some empirical evidence on the relationship between the two variables. In particular, using a cross section sample of 68 developed and developing countries, this paper has found a significant negative effect of ethnolinguistic diversity on social capital. Countries with fractionalized ethnic and linguistic groups as captured by both log number of languages and Desmet et al. (2012) and La Porta et al. (1999)’s measures on linguistic diversity tend to have lower levels of social trust, fewer memberships in social organizations, deteriorated social norms and structure, hence, lower overall social capital stock.