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State History and Economic Development: Evidence from Six Millennia

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  • Borcan, Oana

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Olsson, Ola

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Putterman, Louis

    (Brown University)

Abstract

All since the rise of the first civilizations, economic development has been closely intertwined with the evolution of states. In this paper, we contribute to the literature on state history and long-run economic development in four ways. First, we extend and complete the state history index from Bockstette, Chanda and Putterman (2002) by coding the experience with states from the first state origins, 3500 BCE, up until 2000 CE. Second, we explore empirically the relationship between time since transition to agriculture and state age, as well as subsequent state history. Our estimated unconditional correlation implies that a 1000 year earlier transition to agriculture is associated with a 470 years earlier emergence of state institutions. We show how this relationship differs between indigenously- and externally- originated states. Third, we show that the relationship between our extended state history index and current levels of economic development has the shape of an inverted u. The results reflect the fact that countries that were home to the oldest states, such as Iraq, Egypt and China, are poorer today than younger inheritors of their civilizations, such as Germany, Denmark and Japan. This pattern was already in place by 1500 CE and is robust to adjusting for migrations during the colonial era. Finally, we demonstrate a very close relationship between state formation and the adoption of writing.

Suggested Citation

  • Borcan, Oana & Olsson, Ola & Putterman, Louis, 2014. "State History and Economic Development: Evidence from Six Millennia," Working Papers in Economics 602, University of Gothenburg, Department of Economics.
  • Handle: RePEc:hhs:gunwpe:0602
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    More about this item

    Keywords

    state history; comparative development;

    JEL classification:

    • N00 - Economic History - - General - - - General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

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