It is argued that government credibility is an important resource and that it can
be improved by delegating decision-making competence beyond the nation-state. It
is hypothesized that such delegation should result in higher income and growth. Some
former British colonies retained the Judicial Committee of the Privy Council as their
final court of appeals even after independence. This court is thus taken as a natural
experiment to test our hypothesis. It turns out that retaining the jurisdiction is
indeed significant for explaining economic growth.