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The Persistence of (Subnational) Fortune: Geography, Agglomeration, and Institutions in the New World

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  • William F. Maloney
  • Felipe Valencia Caicedo

Abstract

Using subnational historical data, this paper establishes the within country persistence of economic activity in the New World over the last half millennium. We construct a data set incorporating measures of pre-colonial population density, new measures of present regional per capita income and population, and a comprehensive set of locational fundamentals. These fundamentals are shown to have explanatory power: native populations throughout the hemisphere were found in more livable and productive places. We then show that high pre-colonial density areas tend to be dense today: population agglomerations persist. The data and historical evidence suggest this is due partly to locational fundamentals, but also to classic agglomeration effects: colonialists established settlements near existing native populations for reasons of labor, trade, knowledge and defense. We then show that high density (historically prosperous) areas also tend to have higher incomes today, and largely due to agglomeration effects: fortune persists for the United States and most of Latin America. Further, we show that extractive institutions, in our case, slavery, reduce persistence even if they do not overwhelm other forces in its favor.

Suggested Citation

  • William F. Maloney & Felipe Valencia Caicedo, 2012. "The Persistence of (Subnational) Fortune: Geography, Agglomeration, and Institutions in the New World," Documentos CEDE 010017, Universidad de los Andes – Facultad de Economía – CEDE.
  • Handle: RePEc:col:000089:010017
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    1. Não houve "Reversal of Fortune" no nível subnacional
      by Leonardo Monasterio in Blog do Leonardo Monasterio on 2015-10-24 01:25:00

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    1. Meisel, Adolfo, 2014. "No Reversal Of Fortune In The Long Run: Geography And Spatial Persistence Of Prosperity In Colombia, 1500-2005," Revista de Historia Económica / Journal of Iberian and Latin American Economic History, Cambridge University Press, vol. 32(3), pages 411-428, December.
    2. Hernando Zuleta, 2021. "Competitividad y entorno institucional en Colombia," Documentos CEDE 019623, Universidad de los Andes – Facultad de Economía – CEDE.
    3. Jeffrey Lin, 2015. "The puzzling persistence of place," Business Review, Federal Reserve Bank of Philadelphia, issue Q2, pages 1-8.
    4. Volpe Martincus, Christian & Carballo, Jerónimo & Cusolito, Ana, 2017. "Roads, exports and employment: Evidence from a developing country," Journal of Development Economics, Elsevier, vol. 125(C), pages 21-39.
    5. Maloney, William F. & Valencia, Felipe Caicedo, 2014. "Engineers, Innovative Capacity and Development in the Americas," IZA Discussion Papers 8271, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Persistence; Subnational Growth; Geography; Agglomeration; Institutions;
    All these keywords.

    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics
    • N9 - Economic History - - Regional and Urban History
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O49 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Other

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