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

Author

Listed:
  • 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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    File URL: https://www.economia.uc.cl/docs/doctra/dt-334.pdf
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    References listed on IDEAS

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    Cited by:

    1. Maloney, William F. & Valencia Caicedo, Felipe, 2014. "Engineers, Innovative Capacity and Development in the Americas," IZA Discussion Papers 8271, Institute of Labor Economics (IZA).
    2. 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).
    3. William F. Maloney & Felipe Valencia Caicedo, 2012. "The Persistence of (Subnational) Fortune: Geography, Agglomeration, and Institutions in the New World," Documentos CEDE 10017, Universidad de los Andes, Facultad de Economía, CEDE.
    4. Martínez André & Viarengo Martina & Musacchio Aldo, 2010. "The Great Leap Forward: The Political Economy of Education in Brazil, 1889-1930," Working Papers 2010-18, Banco de México.
    5. Vollrath, Dietrich, 2008. "Wealth Distribution and the Provision of Public Goods: Evidence from the United States," MPRA Paper 11534, University Library of Munich, Germany.
    6. 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.
    7. repec:dau:papers:123456789/4300 is not listed on IDEAS
    8. 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.
    9. 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 / Journal of Iberian and Latin American Economic History, Cambridge University Press, vol. 28(2), pages 253-277, September.
    10. Abdoul' Ganiou Mijiyawa & Alexander Kremer & Loïc Whitmore, 2012. "Does Mena'S Governance Lead To Spatial Agglomeration?," Middle East Development Journal (MEDJ), World Scientific Publishing Co. Pte. Ltd., vol. 4(02), pages 1-23.
    11. 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(2), pages 393-422, May.
    12. William F. Maloney & Felipe Valencia Caicedo, 2017. "Engineering Growth: Innovative Capacity and Development in the Americas," CESifo Working Paper Series 6339, CESifo.

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    More about this item

    Keywords

    Colonialism; institutions; endowments; americas; state-level development;
    All these keywords.

    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 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Property Rights
    • P28 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Natural Resources; Environment

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