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Acemoglu, Johnson, and Robinson: The colonial origins of comparative development

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Acemoglu, Johnson, and Robinson. 2001. The colonial origins of comparative development. American Economic Review 91: 1369-1401.

In Brief

Europeans adopted very different colonization policies in different colonies, with different associated institutions. In places where these colonizers faced high mortality rates, they could not settle permanently, and they were thus more likely to establish extractive institutions, which persisted after independence; in places where they could settle permanently, they established more development-minded institutions. Thus, by using differences in European mortality rates as an instrument for current institutions, the authors estimate large effects of institutions on income per capita. Once the effect of institutions is controlled for, countries in Africa or those close to the equator do not have lower incomes.

Thus, although La Porta et al (and others) focus on the identity/legal system of the colonizers to explain institutions, these authors look at the conditions in the colonies to explain institutions. Then, like others, they argue that these institutions have lingering effects on today's economies. This approach's strength is that its key independent variable (settler mortality) should have no independent effect on development today unless it is through the means of institutions, or so the authors claim.

Controls include identify of colonizer, legal origin, climate, religion, geography, resources, soil quality, ethnolinguistic fragmentation, current disease environment (malaria, life expectancy, infant mortality), and current fraction of the population of European descent

Comments and Criticisms

It's possible that whatever variables caused high settler mortality (climate, disease, hostile locals, etc) also inhibit growth today. Does inclusion of the control variables adequately rule out this threat?