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Good, Bad, and Ugly Colonial Activities: Studying Development Across the Americas

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  • Miriam Bruhn
  • Francisco Gallego

    () (Instituto de Economía. Pontificia Universidad Católica de Chile.)

Abstract

Levels of economic development vary widely within countries in the Americas. We argue that this variation can be explained by differences in institutions which in turn have their roots in the colonial era. Colonizers engaged in different economic activities in different regions of a country, depending on the local conditions and the supply of native labor. Some activities, such as mining and sugar cultivation, where "bad" in the sense that they depended heavily on the exploitation of labor and created extractive institutions, while "good" activities created inclusive institutions. We show that areas with bad colonial activities have 13 percent lower GDP per capita today than areas with good colonial activities. Moreover, areas that had high pre-colonial population density have lower output per capita today, independent of the type of colonial activity. We attribute this to the "ugly" fact that colonizers used the pre-colonial population as an exploitable resource, thereby also creating extractive institutions. We present some evidence that the intermediating factor between history and current development is related to institutional differences across regions and not to income inequality or the current ethnic composition of the population.

Suggested Citation

  • Miriam Bruhn & Francisco Gallego, 2008. "Good, Bad, and Ugly Colonial Activities: Studying Development Across the Americas," Documentos de Trabajo 334, Instituto de Economia. Pontificia Universidad Católica de Chile..
  • Handle: RePEc:ioe:doctra:334
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    Cited by:

    1. Denis Cogneau & Léa Rouanet, 2009. "Living Conditions in Côte d'Ivoire, Ghana and Western Africa 1925-1985: What Do Survey Data on Height Stature Tell Us?," Working Papers DT/2009/12, DIAL (Développement, Institutions et Mondialisation).
    2. Vollrath, Dietrich, 2008. "Wealth Distribution and the Provision of Public Goods: Evidence from the United States," MPRA Paper 11534, University Library of Munich, Germany.
    3. André Martínez & Martina Viarengo & Aldo Musacchio, 2010. "The Great Leap Forward: The Political Economy of Education in Brazil, 1889-1930," Working Papers 2010-18, Banco de México.
    4. Naritomi, Joana & Soares, Rodrigo R. & Assunção, Juliano J., 2012. "Institutional Development and Colonial Heritage within Brazil," The Journal of Economic History, Cambridge University Press, vol. 72(02), pages 393-422, June.
    5. Francisco A. Gallego, 2010. "Historical Origins of Schooling: The Role of Democracy and Political Decentralization," The Review of Economics and Statistics, MIT Press, vol. 92(2), pages 228-243, May.
    6. Maloney, William F. & Valencia, Felipe Caicedo, 2014. "Engineers, Innovative Capacity and Development in the Americas," IZA Discussion Papers 8271, Institute for the Study of Labor (IZA).
    7. 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-CEDE.
    8. André Martínez & Martina Viarengo & Aldo Musacchio, 2010. "The Great Leap Forward: The Political Economy of Education in Brazil, 1889-1930," Working Papers 2010-18, Banco de México.
    9. repec:dau:papers:123456789/4300 is not listed on IDEAS
    10. Joana Naritomi & Rodrigo R. Soares & Juliano J. Assunção, 2007. "Rent Seeking and the Unveiling of 'De Facto' Institutions: Development and Colonial Heritage within Brazil," NBER Working Papers 13545, National Bureau of Economic Research, Inc.
    11. Dobado González, Rafael & García Montero, Héctor, 2010. "Colonial Origins of Inequality in Hispanic America? Some Reflections Based on New Empirical Evidence," Revista de Historia Económica, Cambridge University Press, vol. 28(02), pages 253-277, September.

    More about this item

    Keywords

    Colonialism; institutions; endowments; americas; state-level development;

    JEL classification:

    • N26 - Economic History - - Financial Markets and Institutions - - - Latin America; Caribbean
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • P14 - Economic Systems - - Capitalist Systems - - - Property Rights
    • P28 - Economic Systems - - Socialist Systems and Transition Economies - - - Natural Resources; Environment

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