@techreport{Grimm2008Geography, abstract = {There is a well-
known debate about the roles of geography versus institutions in
explaining the long-term development of countries. These debates
have usually been based on cross-country regressions where
questions about parameter heterogeneity, unobserved
heterogeneity, and endogeneity cannot easily be controlled for.
The innovation of Acemoglu, Johnson and Robinson (2001) was to
address this last point by using settler mortality as an
instrument for geography-induced endogenous institutions and
found that this supported their line of reasoning. We believe
there is value-added to consider this debate at the micro level
within a country as particularly questions of parameter
heterogeneity and unobserved heterogeneity are likely to be
smaller than between countries. Moreover, at the micro level it
is possible to identify more precise transmission mechanisms
from geography via institutions to economic development
outcomes. In particular, we examine the determinants of