The Colonial Origins of Comparative Development: An Empirical Investigation

by Daron Acemoğlu, Simon Johnson, James A. Robinson

We exploit differences in European mortality rates to estimate the effect of institutions on economic performance. Europeans adopted very different colonization policies in different colonies, with different associated institutions. In places where Europeans faced high mortality rates, they could not settle and were more likely to set up extractive institutions. These institutions persisted to the present. Exploiting differences in European mortality rates as an instrument for current institutions, we estimate large effects of institutions on income per capita. Once the effect of institutions is controlled for, countries in Africa or those closer to the equator do not have lower incomes.

Genres: Economics

33 pages, Unknown Binding

First published December 1, 2001

About the author

Daron Acemoglu is the Elizabeth and James Killian Professor of Economics at the Massachusetts Institute of Technology. In 2005 he won the prestigious John Bates Clark medal, awarded to the best economist under 40.

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Notes
British common-law superiority vs Napoleonic civil law (to curtail power of judges over state) leading to better institutions, property rights, financial markets - explains differential wealth of British colonies (Aus/NZ/Canada/US): identity of colonizer vs condition of colony

Climate, ethnolinguistic fragmentation could make institutions an endogenous variable, but European mortality can only affect output today through the institutions.

Pilgrims decided on US rather than first choice Guyana because of European mortality rate. British convicts originally planned for Gambia, but decided was too dangerous even for convicts, sent to Australia.

Institutional persistence by a) inertia (switching from extractive to property-right or viceversa is costly) b) gains of extractive strategy depends on size of ruling elite, small number is more incentive to be extractive c) agents making irreversible investments complementary to institutions willing to make them persist (like human capital)

Malarial immunity includes apparent-immunity (parasite lives in liver), genetic traits like sickle-cell and deficiencies in glucose-6-phosphate dehydrogenase, thalassaemia. 1M per year die of malaria, but mostly children not adults who grew up in malaria-endemic zones

Yellow fever higher fatality than malaria for Europeans. Lifelong immunity for survivors (hence its epidemic pattern, relying on concentrated nonimmune population).

Though high areas reduce risk of infection (Bogota), mortality rates lower in coastals - Ceylon mortality higher in highlands, rains on coast wash away the larvae. Madras lower rate of infection than north.