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The European origins of economic development

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  • Easterly, William
  • Levine, Ross

Abstract

A large literature suggests that European settlement outside of Europe shaped institutional, educational, technological, cultural, and economic outcomes. This literature has had a serious gap: no direct measure of colonial European settlement. In this paper, we (1) construct a new database on the European share of the population during the early stages of colonization and (2) examine its impact on the level of economic development today. We find a remarkably strong impact of colonial European settlement on development. According to one illustrative exercise, 47 percent of average global development levels today are attributable to Europeans. One of our most surprising findings is the positive effect of even a small minority European population during the colonial period on per capita income today, contradicting traditional and recent views. There is some evidence for an institutional channel, but our findings are most consistent with human capital playing a central role in the way that colonial European settlement affects development today.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 39413.

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Date of creation: Jun 2012
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Handle: RePEc:pra:mprapa:39413

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Keywords: Institutions; Human Capital; Political Economy; Natural Resources;

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  1. Louis Putterman & David N. Weil, 2008. "Post-1500 Population Flows and the Long Run Determinants of Economic Growth and Inequality," NBER Working Papers 14448, National Bureau of Economic Research, Inc.
  2. Alessandra Fogli & Raquel Fernandez, 2005. "Culture: An Empirical Investigation of Beliefs, Work, and Fertility," Working Papers, New York University, Leonard N. Stern School of Business, Department of Economics 05-07, New York University, Leonard N. Stern School of Business, Department of Economics.
  3. Hibbs Jr., Douglas A. & Olsson, Ola, 2003. "Geography, Biogeography and Why Some Countries are Rich and Others Poor," Working Papers in Economics 105, University of Gothenburg, Department of Economics, revised 15 Jan 2004.
  4. Nunn, Nathan, 2008. "The Long-Term Effects of Africa's Slave Trades," Scholarly Articles 3710252, Harvard University Department of Economics.
  5. Guido Tabellini, 2008. "Presidential Address Institutions and Culture," Journal of the European Economic Association, MIT Press, MIT Press, vol. 6(2-3), pages 255-294, 04-05.
  6. Galor, Oded & Moav, Omer & Vollrath, Dietrich, 2008. "Inequality in Land Ownership, the Emergence of Human Capital Promoting Institutions and the Great Divergence," CEPR Discussion Papers 6751, C.E.P.R. Discussion Papers.
  7. Oded Galor & Omer Moav, 2006. "Das Human-Kapital: A Theory of the Demise of the Class Structure," Review of Economic Studies, Oxford University Press, vol. 73(1), pages 85-117.
  8. Bockstette, Valerie & Chanda, Areendam & Putterman, Louis, 2002. " States and Markets: The Advantage of an Early Start," Journal of Economic Growth, Springer, vol. 7(4), pages 347-69, December.
  9. Oded Galor & Omer Moav & Dietrich Vollrath, 2005. "Land Inequality and the Emergence of Human Capital Promoting Institutions," Development and Comp Systems 0502018, EconWPA.
  10. Edward L. Glaeser & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2004. "Do Institutions Cause Growth?," Journal of Economic Growth, Springer, vol. 9(3), pages 271-303, 09.
  11. David N. Weil & Oded Galor, 2000. "Population, Technology, and Growth: From Malthusian Stagnation to the Demographic Transition and Beyond," American Economic Review, American Economic Association, vol. 90(4), pages 806-828, September.
  12. Easterly, William, 2007. "Inequality does cause underdevelopment: Insights from a new instrument," Journal of Development Economics, Elsevier, vol. 84(2), pages 755-776, November.
  13. Abhijit Banerjee & Lakshmi Iyer, 2005. "History, Institutions, and Economic Performance: The Legacy of Colonial Land Tenure Systems in India," American Economic Review, American Economic Association, vol. 95(4), pages 1190-1213, September.
  14. Frank Kleibergen & Richard Paap, 2003. "Generalized Reduced Rank Tests using the Singular Value Decomposition," Tinbergen Institute Discussion Papers 03-003/4, Tinbergen Institute.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. European colonisation: good or bad?
    by Johan Fourie in Johan Fourie's Blog on 2012-07-10 16:30:07
  2. European colonization was the root to present economic development
    by Inaki Villanueva in Applied economist on 2012-08-14 19:27:00
  3. The deep roots of economic development
    by Jason Collins in Evolving Economics on 2013-07-29 12:07:05
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Cited by:
  1. Giuliano, Paola & Nunn, Nathan, 2013. "The Transmission of Democracy: From the Village to the Nation-State," Scholarly Articles 11986384, Harvard University Department of Economics.
  2. Alexandre Rands Barros, 2010. "Historical Origins of Brazilian Relative Backwardness," Working Papers, Datamétrica Consultoria Econômica 64, Datamétrica Consultoria Econômica, revised 2012.
  3. Gordon C. McCord & Jeffrey D. Sachs, 2013. "Development, Structure, and Transformation: Some Evidence on Comparative Economic Growth," NBER Working Papers 19512, National Bureau of Economic Research, Inc.
  4. Nunn, Nathan, 2014. "Historical Development," Handbook of Economic Growth, in: Handbook of Economic Growth, edition 1, volume 2, chapter 7, pages 347-402 Elsevier.
  5. Michalopoulos, Stelios & Papaioannou, Elias, 2013. "The Long-Run Effects of the Scramble for Africa," CAGE Online Working Paper Series, Competitive Advantage in the Global Economy (CAGE) 162, Competitive Advantage in the Global Economy (CAGE).
  6. 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.
  7. Ideen A. Riahi, 2013. "Colonization and Genetics of Comparative Development," Discussion Papers dp13-11, Department of Economics, Simon Fraser University, revised 29 Oct 2013.

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