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Economic and Political Inequality in Development: The Case of Cundinamarca, Colombia

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  • Daron Acemoglu
  • María Angélica Bautista
  • Pablo Querubín
  • James A. Robinson

Abstract

Is inequality harmful for economic growth? Is the underdevelopment of Latin America related to its unequal distribution of wealth? A recently emerging consensus claims not only that economic inequality has detrimental effects on economic growth in general, but also that differences in economic inequality across the American continent during the 19th century are responsible for the radically different economic performances of the north and south of the continent. In this paper we investigate this hypothesis using unique 19th century micro data on land ownership and political office holding in the state of Cundinamarca, Colombia. Our results shed considerable doubt on this consensus. Even though Cundinamarca is indeed more unequal than the Northern United States at the time, within Cundinamarca municipalities that were more unequal in the 19th century (as measured by the land gini) are more developed today. Instead, we argue that political rather than economic inequality might be more important in understanding long-run development paths and document that municipalities with greater political inequality, as measured by political concentration, are less developed today. We also show that during this critical period the politically powerful were able to amass greater wealth, which is consistent with one of the channels through which political inequality might affect economic allocations. Overall our findings shed doubt on the conventional wisdom and suggest that research on long-run comparative development should investigate the implications of political inequality as well as those of economic inequality.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13208.

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Date of creation: Jun 2007
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Handle: RePEc:nbr:nberwo:13208

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Cited by:
  1. de Carvalho Filho, Irineu & Monasterio, Leonardo M, 2011. "Immigration and the origins of regional inequality: Government-sponsored European migration to Southern Brazil before World War I," MPRA Paper 27954, University Library of Munich, Germany.
  2. Durante, Ruben & Labartino, Giovanna & Perotti, Roberto, 2011. "Academic Dynasties: Decentralization and Familism in the Italian Academia," CEPR Discussion Papers 8645, C.E.P.R. Discussion Papers.
  3. 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.
  4. Pauline Grosjean & Claudia Senik, 2011. "Democracy, Market Liberalization, and Political Preferences," The Review of Economics and Statistics, MIT Press, vol. 93(1), pages 365-381, February.
  5. Ferreira, Francisco H. G. & Leite, Phillippe G. & Ravallion, Martin, 2007. "Poverty reduction without economic growth ? explaining Brazil's poverty dynamics, 1985-2004," Policy Research Working Paper Series 4431, The World Bank.
  6. Denis COGNEAU, 2012. "The Political Dimension Of Inequality During Economic Development," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 35, pages 11-36.
  7. Pauline Grosjean & Claudia Senik, 2008. "How populist democracy promotes market liberalization," PSE Working Papers halshs-00586284, HAL.
  8. Rodney Ramcharan, 2010. "Inequality and Redistribution: Evidence from U.S. Counties and States, 1890-1930," The Review of Economics and Statistics, MIT Press, vol. 92(4), pages 729-744, November.
  9. Nunn, Nathan, 2007. "Slavery, Inequality, and Economic Development in the Americas: An Examination of the Engerman-Sokoloff Hypothesis," MPRA Paper 4080, University Library of Munich, Germany.
  10. Pauline Grosjean & Claudia Senik, 2008. "How populist democracy promotes market liberalization," Working Papers halshs-00586284, HAL.
  11. Erdogdu, E., 2012. "A cross country analysis of electricity market reforms: potential contribution of New Institutional Economics," Cambridge Working Papers in Economics 1232, Faculty of Economics, University of Cambridge.
  12. Bluhm, Richard & Szirmai, Adam, 2012. "Institutions and long-run growth performance: An analytic literature review of the institutional determinants of economic growth," UNU-MERIT Working Paper Series 033, United Nations University, Maastricht Economic and social Research and training centre on Innovation and Technology.
  13. Galan, Juan Sebastian, 2011. "The Long Trace of Inequality: Evidence from Cundinamarca, Colombia," Documentos CEDE Series 107398, Universidad de Los Andes, Economics Department.
  14. Richard Bluhm & Adam Szirmai & UNICEF Innocenti Research Centre, 2011. "Institutions, Inequality and Growth: A review of theory and evidence on the institutional determinants of growth and inequality," Innocenti Working Papers inwopa634, UNICEF Innocenti Research Centre.
  15. Naritomi, Joana & Soares, Rodrigo R. & Assunção, Juliano J., 2012. "Institutional Development and Colonial Heritage within Brazil," The Journal of Economic History, Cambridge University Press, vol. 72(02), pages 393-422, June.

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