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

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Author Info
Miriam Bruhn
Francisco Gallego () (Instituto de Economía. Pontificia Universidad Católica de Chile.)

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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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Paper provided by Instituto de Economía. 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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Related research
Keywords: Colonialism; Institutions; Endowments; Americas; State-Level Development;

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Find related papers by JEL classification:
N26 - Economic History - - Financial Markets and Institutions - - - Latin America; Caribbean
O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
P14 - Economic Systems - - Capitalist Systems - - - Property Rights
P28 - Economic Systems - - Socialist Systems and Transition Economies - - - Natural Resources; Environment

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References listed on IDEAS
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. 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. [Downloadable!]
    Other versions:
  2. 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. [Downloadable!] (restricted)
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