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    Report On Colonial Roots of Comparative Development by AJR

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    Maxim Ananyev
    Institutions matter for economic growth and development, but it is difficult to isolate their impact. This study looks at how colonial origins influenced the establishment of institutions. It finds that settler colonies developed good institutions like property rights and trade, while extractive colonies established bad institutions like forced labor and authoritarian rule. These early institutions persisted and still influence countries' modern institutions and current wealth levels. The type of colony was largely determined by colonial mortality rates - settler colonies were more likely where mortality rates were lower.

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    Report On Colonial Roots of Comparative Development by AJR

    Uploaded by

    Maxim Ananyev
    89 views23 pages
    Institutions matter for economic growth and development, but it is difficult to isolate their impact. This study looks at how colonial origins influenced the establishment of institutions. It finds that settler colonies developed good institutions like property rights and trade, while extractive colonies established bad institutions like forced labor and authoritarian rule. These early institutions persisted and still influence countries' modern institutions and current wealth levels. The type of colony was largely determined by colonial mortality rates - settler colonies were more likely where mortality rates were lower.

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    Report on Colonial Roots of Comparative Development by AJR

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    Institutions matter for economic growth and development, but it is difficult to isolate their impact. This study looks at how colonial origins influenced the establishment of institutions. It finds that settler colonies developed good institutions like property rights and trade, while extractive colonies established bad institutions like forced labor and authoritarian rule. These early institutions persisted and still influence countries' modern institutions and current wealth levels. The type of colony was largely determined by colonial mortality rates - settler colonies were more likely where mortality rates were lower.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as ppt, pdf, or txt
    89 views23 pages

    Report On Colonial Roots of Comparative Development by AJR

    Uploaded by

    Maxim Ananyev
    Institutions matter for economic growth and development, but it is difficult to isolate their impact. This study looks at how colonial origins influenced the establishment of institutions. It finds that settler colonies developed good institutions like property rights and trade, while extractive colonies established bad institutions like forced labor and authoritarian rule. These early institutions persisted and still influence countries' modern institutions and current wealth levels. The type of colony was largely determined by colonial mortality rates - settler colonies were more likely where mortality rates were lower.

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    of 23

    Report on “Colonial Origins of

    Comparative Development…”
    by D. Acemoglu, S. Johnson,
    J. Robinson
    Maxim Ananyev
    New Economic School
    MAE, class 2012
    Does the difference in institutions
    cause large difference in per capita
    income between countries?
    Institutions matter.
    Two (somewhat) contradicting
    opinions:

    Good institutions cause economic


    growth
    OR
    Rich countries develop better
    institutions
    How to isolate the impact of
    institutions?

    Look at the countries, where the


    institutions had been established
    exogenously i.e. former colonies
    Types of colonies
    • For extraction of wealth (bad institutions)
    • For settlements (good institutions)
    AJR Historical Hypothesis
    Mortality

    Settlements

    Early institutions

    Modern institutions
    Low mortality rate – key determinant
    of where to settle

    Where should the pilgrims go?


    Guyana United
    States
    Where to send convicts?
    Gambia River Australia
    Settler colonies
    • Freedom of enterprise
    • Trade
    • Property rights
    Non-settlers colonies
    • Forced labor
    • High taxes
    • Extraction of wealth
    • Authoritarian rule
    Persistence of bad institutions
    Forced labor:
    • Until 1886 in Brazil
    • Until 1910 in Mexico
    • Until 1945 in Guatemala
    OLS: Wealth and Institutions

    y – current per-capita GDP


    R – current institutions
    Institutions and wealth
    This data may not prove anything
    • Reverse causality
    • Many omitted determinants
    • Natural bias: seeing better institutions in richer
    places
    It is better to look at settlers mortality
    rates
    The main causes of settler mortality - malaria
    and yellow fever – did not hurt local
    population as much

    They did not influence local economy – only


    the institutions imposed by the foreigners.
    Least-squares estimates

    R - current institutions
    C - early institutions
    S - settlements
    M - mortality rate
    In Simple English:

    Current institutions depend on early


    institutions.

    Early institutions depend on the European


    settlements

    European settlements depend on mortality


    rate
    Current institutions depend on early
    institutions

    Dependant variable is protection against


    expropriation risk in 1985 - 1995
    Early institutions depend on European
    settlements

    Dependant variable is constraint on


    executive in 1900
    European settlements depend on
    mortality rate

    Dependant variable is European


    settlements in 1900
    Current institutions depend on
    mortality rate

    Dependant variable is protection against


    expropriation risk in 1985 - 1995
    Robustness
    AJR also control for:
    • latitude
    • humidity
    • quality of soil
    • temperature
    • ethnolinguistic fragmentation
    • etc.
    Conclusion
    This findings reveal that colonial
    regime is one of the important factors
    that determine modern institutions
    and wealth of nations.

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