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Good, Bad and Ugly Colonial Activities: Do They Matter for Economic Development?

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  • Francisco Gallego

    ()
    (Instituto de Economía. Pontificia Universidad Católica de Chile.)

  • Miriam Bruhn

    ()
    (World Bank)

Abstract

Levels of economic development vary widely within countries in the Americas. We argue that part of this variation has its roots in the colonial era. Colonizers engaged in different economic activities in different regions of a country, depending on local conditions. Some activities, such as mining and sugar cultivation, were “bad” in the sense that they depended heavily on the exploitation of labor and led to a low development path, while “good” activities led to a high development path. We show that areas with bad colonial activities have lower output per capita today than areas with good colonial activities. Areas with high pre-colonial population density also do worse today. Moreover, the positive effect of “good” activities goes away in areas with high pre-colonial population density. We attribute this to the “ugly” fact that colonizers used the pre-colonial population as an exploitable resource, thereby also leading to a low development path. Our results suggest that differences in political representation and in the current ethnic composition of the population (but not differences in human capital or income inequality) could be the intermediating factors between colonial activities and current development.

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Bibliographic Info

Paper provided by EH Clio Lab. Instituto de Economía. Pontificia Universidad Católica de Chile in its series Working Papers ClioLab with number 6.

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Date of creation: 2009
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Handle: RePEc:ioe:clabwp:6

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Cited by:
  1. Nunn, Nathan, 2014. "Historical Development," Handbook of Economic Growth, in: Handbook of Economic Growth, edition 1, volume 2, chapter 7, pages 347-402 Elsevier.
  2. Axel Dreher & Matthew Gould & Matthew Rablen & James Vreeland, 2014. "The determinants of election to the United Nations Security Council," Public Choice, Springer, vol. 158(1), pages 51-83, January.
  3. Rodrigo Cerda, 2009. "The Impact of Government Spending on the Duration and the Intensity of Economic Crises: Latin America 1900-2000," Working Papers ClioLab 1, EH Clio Lab. Instituto de Economía. Pontificia Universidad Católica de Chile.
  4. Daron Acemoglu & Camilo García-Jimeno & James A. Robinson, 2014. "State Capacity and Economic Development: A Network Approach," NBER Working Papers 19813, National Bureau of Economic Research, Inc.
  5. Sanghamitra Bandyopadhyay & Elliott Green, 2012. "Pre-Colonial Political Centralization and Contemporary Development in Uganda," STICERD - Economic Organisation and Public Policy Discussion Papers Series 039, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  6. Álvaro Aguirre, 2013. "Rebellions, Technical Change, and the Early Development of Political Institutions in Latin America," Working Papers Central Bank of Chile 688, Central Bank of Chile.
  7. Aldo Musacchio & André Carlos Martínez Fritscher & Martina Viarengo, 2010. "Colonial Institutions, Trade Shocks, and the Diffusion of Elementary Education in Brazil, 1889-1930," Harvard Business School Working Papers 10-075, Harvard Business School, revised Dec 2012.
  8. Jeffrey G. Williamson, 2009. "Five Centuries of Latin American Inequality," NBER Working Papers 15305, National Bureau of Economic Research, Inc.

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