Persistent Effects of Colonial Institutions on Long‐Run Development: Local Evidence from Regression Discontinuity Design in Argentina

We exploit the discontinuity in the integration into the colonial court district of Real Audiencia in Upper Peru to estimate how colonial institutions have impacted local development across 527 departments in Argentina. Our identification strategy takes advantage of geo‐referenced spatial boundary splits with local quasi‐randomization between the localities integrated into the colonial court jurisdiction and the localities outside Audiencia's jurisdiction. The results show the impact of colonial institutions imposed by real audiencia in Upper Peru is both strong and remarkably persistent. Departments outside the colonial court district have lower literacy rates, a less computer‐literate population, better physical and digital infrastructure, and more widespread computer ownership. The established effects of real audiencia do not seem driven by the climatic conditions and environment of disease, and are robust to a battery of specification checks, placebo tests, and falsification tests. We show that Audiencia's effect persisted through its influence on public goods provision, economic specialization patterns, clientelist networks, and elite control of the political representation.