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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 & Valerie Bockstette, 2000. "States and Markets:the Advantage of an Early Start," Working Papers 2000-12, Brown University, Department of Economics.
  2. 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.
  3. Oded Galor & Omer Moav, 2004. "Das Human Kapital: A Theory of the Demise of the Class Structure," GE, Growth, Math methods 0410003, EconWPA.
  4. 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.
  5. Alessandra Fogli & Raquel Fernandez, 2009. "Culture: An Empirical Investigation of Beliefs, Work, and Fertility," American Economic Journal: Macroeconomics, American Economic Association, vol. 1(1), pages 146-77, January.
  6. 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.
  7. Richard Paap & Frank Kleibergen, 2004. "Generalized Reduced Rank Tests using the Singular Value Decomposition," Econometric Society 2004 Australasian Meetings 195, Econometric Society.
  8. Oded Galor & Omer Moav & Dietrich Vollrath, 2009. "Inequality in Landownership, the Emergence of Human-Capital Promoting Institutions, and the Great Divergence," Review of Economic Studies, Oxford University Press, vol. 76(1), pages 143-179.
  9. Easterly, William, 2007. "Inequality does cause underdevelopment: Insights from a new instrument," Journal of Development Economics, Elsevier, vol. 84(2), pages 755-776, November.
  10. Oded Galor & Omer Moav & Dietrich Vollrath, 2005. "Land Inequality and the Emergence of Human Capital Promoting Institutions," Development and Comp Systems 0502018, EconWPA.
  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.
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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. 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. Alexandre Rands Barros, 2010. "Historical Origins of Brazilian Relative Backwardness," Working Papers 64, Datamétrica Consultoria Econômica, revised 2012.

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