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Good, Bad, and Ugly Colonial Activities: Studying Development Across the Americas

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  • Miriam Bruhn
  • Francisco Gallego

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

Abstract

Levels of economic development vary widely within countries in the Americas. We argue that this variation can be explained by differences in institutions which in turn have their roots in the colonial era. Colonizers engaged in different economic activities in different regions of a country, depending on the local conditions and the supply of native labor. Some activities, such as mining and sugar cultivation, where "bad" in the sense that they depended heavily on the exploitation of labor and created extractive institutions, while "good" activities created inclusive institutions. We show that areas with bad colonial activities have 13 percent lower GDP per capita today than areas with good colonial activities. Moreover, areas that had high pre-colonial population density have lower output per capita today, independent of the type of colonial activity. We attribute this to the "ugly" fact that colonizers used the pre-colonial population as an exploitable resource, thereby also creating extractive institutions. We present some evidence that the intermediating factor between history and current development is related to institutional differences across regions and not to income inequality or the current ethnic composition of the population.

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Bibliographic Info

Paper provided by Instituto de Economia. Pontificia Universidad Católica de Chile. in its series Documentos de Trabajo with number 334.

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Date of creation: 2008
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Handle: RePEc:ioe:doctra:334

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Keywords: Colonialism; institutions; endowments; americas; state-level development;

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Cited by:
  1. Denis Cogneau & Léa Rouanet, 2009. "Living Conditions in Côte d'Ivoire, Ghana and Western Africa 1925-1985: What Do Survey Data on Height Stature Tell Us?," Working Papers DT/2009/12, DIAL (Développement, Institutions et Mondialisation).
  2. Maloney, William F. & Caicedo, Felipe Valencia, 2012. "The persistence of (subnational) fortune : geography, agglomeration, and institutions in the new world," Policy Research Working Paper Series 6187, The World Bank.
  3. Dobado González, Rafael / R & García Montero, Héctor / H, 2010. "Colonial Origins of Inequality in Hispanic America? Some reflections based on new empirical evidence," MPRA Paper 28738, University Library of Munich, Germany.
  4. Dietz Vollrath, 2008. "Wealth Distribution and the Provision of Public Goods: Evidence from the United States," Working Papers 2008-04, Department of Economics, University of Houston.
  5. Joana Narotomi & Rodrigo Soares & Juliano J. Assunção, 2009. "Institutional Development and Colonial Heritage within Brazil," Textos para discussão 561, Department of Economics PUC-Rio (Brazil).
  6. André Martínez-Fritscher & Aldo Musacchio & Martina Viarengo, 2010. "The Great Leap Forward: The Political Economy Of Education In Brazil, 1889-1930," Working Papers 03-2010, Universidade de São Paulo, Faculdade de Economia, Administração e Contabilidade de Ribeirão Preto.
  7. Francisco Gallego, 2008. "Historical Origins of Schooling: The Role of Democracy and Political Decentralization," Documentos de Trabajo 342, Instituto de Economia. Pontificia Universidad Católica de Chile..
  8. Joana Naritomi & Rodrigo R. Soares & Juliano J. Assunção, 2007. "Rent Seeking and the Unveiling of 'De Facto' Institutions: Development and Colonial Heritage within Brazil," NBER Working Papers 13545, National Bureau of Economic Research, Inc.

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