NOTES: HISTORY & COLONIALISM Long-Term Determinants of Economic Development (Empirical Studies) INSTITUTIONAL DEBATE (1) THE COLONIAL

ORIGINS OF COMPARATIVE DEVELOPMENT: AN EMPIRICAL INVESTIGATION DARON ACEMOGLU, SIMON JOHNSON & JAMES A. ROBINSON In a nutshell: Persistence of historical institutions determines economic output/growth today. Theory of institutional differences among countries colonized by Europeans, three premises: i) Different types of colonization policies created different institutions; extractive states like the Belgian Congo did not introduce protection for private property; Neo-Europes were where settlers tried to replicate European institutions private property and checks on government power ii) Colonization strategy was influenced by the feasibility of settlements disease environment favorable or unfavorable for settlements iii) The colonial state and institutions persisted after independence Main Question: Is there a causal relationship between institutions and current income per capita? Main Problem: Institutions can be endogenous (what is an exogenous source of variation in institutions?) Also, presence of reverse causality; do institutions cause higher levels of per capita income in rich countries, or can rich countries afford better institutions? Methodology: Use mortality rates expected by the first European settlers in the colonies as an instrument for current institutions in these countries (IV: Settler mortality rates) (potential) settler mortality settlements early institutions current institutions current performance Exclusion Restriction: The mortality rates of European settlers more than 100 years ago have no effect on GDP per capita today, other than their effect through institutional development - Mortality rates of settlers could be correlated with the current disease environment, which may have a direct effect on economic performance (Sachs debate) - IVs may be assigning the effect of diseases on income to institutions - Majority of European deaths were caused by malaria and yellow fever; the diseases had limited effect on indigenous adults who had developed immunities Data: Limited to 64 countries that were ex-colonies, which have data on settler mortality, protection against expropriation risk, and GDP (per capita) - Settler mortality; Mortality rates of soldiers, bishops, and sailors stationed in the colonies between the 17th and 19th centuries (based on the work of the historian Philip D. Curtin); Death rate among 1,000 soldiers and Vatican records of bishop mortality rates - Current institutions; Protection against risk of appropriation index from Political Risk Services as a proxy for institutions ( use average value for each country between 1985 to 1995) High correlation between mortality rates faced by soldiers, bishops, and sailors in the colonies and European settlements: Between European settlements and early measures of institutions

 Between early institutions and institutions today Large effects of institutions on income per capita today