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Study of the factors determining institutional quality in developing countries

14th National Competition for Economic Research Grants

Public economics

Senior Researcher : Mónica Martínez Bravo

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Research Centre or Institution : Centro de Estudios Monetarios y Financieros (CEMFI)


Since the end of the 20th century, the majority of the world's countries have had political systems that are considered democratic. However, the quality of their political institutions is very uneven. This research project will analyse whether the characteristics of democratic transitions can affect the institutional quality of democratic systems. For this, we will use a natural experiment which took place in the transition to democracy in Indonesia. After the fall of General Suharto, the mayors appointed by Suharto were replaced by democratically-elected mayors. However, that replacement was not immediate but rather took place at different times in different districts. Those events meant that there was considerable variation in the length of time that Suharto's mayors remained in power in the different districts during the initial phases of the transition to democracy.

The main hypothesis of this study is as follows: the Suharto-appointed mayors who governed for longer in the initial phases of democracy had more time to manipulate the incipient institutions and introduce strategies which limited political power. Consequently, those districts developed worse public policies and poorer institutional quality. This research project will use numerous databases and rigorous econometric techniques to evaluate the empirical validity of this hypothesis.

In a second line of research, this project will analyse the cultural legacies of non-democratic periods. Specifically, it will study whether the citizens who experienced non-democratic periods during their youth show greater adherence to democratic values. For this, a sample of several Latin American countries which underwent non-democratic episodes in the 1970s and 1980s will be used.

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