FIW Working Papers | 2015-07

Regional Integration and the Rule of Law

This paper constructs agreement specific instruments in order to estimate the effect of membership in a regional cooperation agreement (RCA) on institutional change. For a sample of 144 emerging and developing economies, the results show that membership in a RCA explains a significant part of the cross country variation in institutional reforms. EU and NATO-related agreements are an important reason why emerging markets in Eastern Europe and Central Asia have been better reformers despite their socialistic heritage. RCAs are a main factor why African economies are still doing very poorly in terms of institutional reforms. I show that the construction of the RCA and the willingness delegate sovereignty is behind the effect on institutions and is an important.