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Determinants and Economic Consequences of Colonization: A Global Analysis

Research on economic growth suggests that the era of colonization has had an impact on the levels of economic development of countries around the globe. However, why some countries were colonized early, some late, and others not at all, and what effect these differences have had on current income, has not been studied systematically. In the first part of this paper, we show that both the occurrence and the timing of colonization can be explained by (a) differences in levels of pre-1500 development, (b) proximity to the colonizing powers, (c) disease environment, and (d) latitude. In the second part, we analyze the developmental consequences of colonization while taking the endogeneity of colonization’s occurrence and timing into account. Whereas naïve estimates can suggest large impacts, we find that neither the fact nor the timing of colonization affect income today once colonization’s impact on the composition of the population and the quality of institutions is controlled for.

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Paper provided by Brown University, Department of Economics in its series Working Papers with number 2012-5.

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Date of creation: 2012
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Handle: RePEc:bro:econwp:2012-5
Contact details of provider: Postal: Department of Economics, Brown University, Providence, RI 02912

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  1. Clingingsmith, David & Williamson, Jeffrey G., 2008. "Deindustrialization in 18th and 19th century India: Mughal decline, climate shocks and British industrial ascent," Explorations in Economic History, Elsevier, vol. 45(3), pages 209-234, July.
  2. Diego Comin & William Easterly & Erick Gong, 2006. "Was the Wealth of Nations Determined in 1000 B.C.?," NBER Working Papers 12657, National Bureau of Economic Research, Inc.
  3. Graziella Bertocchi & Fabio Canova, 1996. "Did colonization matter for growth? An empirical exploration into the historical causes of Africa's underdevelopment," Economics Working Papers 202, Department of Economics and Business, Universitat Pompeu Fabra.
  4. Gregory N. Price, 2003. "Economic Growth in a Cross-section of Nonindustrial Countries: Does Colonial Heritage Matter for Africa?," Review of Development Economics, Wiley Blackwell, vol. 7(3), pages 478-495, 08.
  5. Raphael A. Auer, 2012. "Geography, Institutions, and the Making of Comparative Development," CESifo Working Paper Series 3874, CESifo Group Munich.
  6. Quamrul Ashraf & Oded Galor, 2008. "Human Genetic Diversity and Comparative Economic Development," 2008 Meeting Papers 617, Society for Economic Dynamics.
  7. Abhijit Banerjee & Lakshmi Iyer, 2010. "History Institutions and Economic Performance: The Legacy of Colonial Land Tenure Systems in India," Working Papers id:2811, eSocialSciences.
  8. Olsson, Ola, 2009. "On the democratic legacy of colonialism," Journal of Comparative Economics, Elsevier, vol. 37(4), pages 534-551, December.
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