Local institutions and rural development : evidence from Liberia

Local institutions and rural development: Evidence from Liberia This thesis focusses on the role of local (informal) institutions for development, based on data from Liberia. I show that dense family networks can be an obstacle for economic decision making, due to strict income sharing obligations that often belong to them. I also demonstrate the importance of local governance quality: corrupt village leaders negatively affect daily investment decisions by villagers. Finally, I evaluate the impact of a rural development project that aims to strengthen food security and social cohesion between villagers. The results indicate that the impact is marginal at most, and local institutions again do play a role. Institutions are difficult to change, as they are rooted in an historical context. However, policy makers could support the emergence of alternative institutions. Either way, a deeper understanding of the far-going impact of local institutions is important: this research contributes to that.