Sensitivity to Alternative Theories

This chapter exhaustively controls for all possible factors framed within alternative theories that can explain postcolonial institutional development, which may be relevant omitted variables for the baseline interaction model. These factors comprise (1) distance to the metropolis of Western colonial powers to account for differences in transportation costs from the metropolis to the colonies, (2) geographic costs of control of colonial dominions, (3) time variation in the colonial strategies of different colonial powers within the two main waves of colonization, (4) religion, (5) ethnolinguistic fractionalization and the existence of several precolonial native cultures, (6) the possibility that precolonial political centralization affected the strategies of colonizers beyond its effect on the accountability of local chiefs, and (7) climate and other geographical factors. The evidence indicates that the alternative explanation associated with the timing and duration of colonialism fails to overturn our results regarding the sharp contrast across colonial powers in the effect of endowments on current institutions. Concerning the inclusion of sociological and anthropological factors, current institutional levels are driven by the institutional arrangements imposed externally by the colonizers in the colonies (which in turn differed on the basis of the initial level of endowments) rather than by the degree of precolonial centralization or ethnic homogeneity encountered by European colonial powers upon their arrival. In addition, our results do not appear to be simply caused by a correlation between institutions and colonies concentrated in areas with certain geographic or climatic features.