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Report on Colonial Origins of
Comparative Development
by D. Acemoglu, S. Johnson,J. Robinson
Maxim Ananyev
New Economic School
MAE, class 2012
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Does the difference in institutions
cause large difference in per capitaincomebetween countries?
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Institutions matter.
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Two (somewhat) contradicting
opinions:
Good institutions cause economic
growthOR
Rich countries develop betterinstitutions
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How to isolate the impact of
institutions?
Look at the countries, where the
institutions had been establishedexogenously i.e. former colonies
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Types of colonies
For extraction of wealth (bad institutions)
For settlements (good institutions)
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AJRHistorical Hypothesis
Mortality
Settlements
Modern institutions
Early institutions
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Low mortality rate key determinant
of where to settle
Where should the pilgrims go?
Guyana United States
Where to send convicts?
Gambia River Australia
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Settler colonies
Freedom of enterprise
Trade
Property rights
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Non-settlers colonies
Forced labor
High taxes
Extraction of wealth
Authoritarian rule
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Persistence of bad institutions
Forced labor:
Until 1886 in Brazil
Until 1910 in Mexico
Until 1945 in Guatemala
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OLS: Wealth and Institutions
y current per-capita GDP
R current institutions
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Institutions and wealth
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This data may not prove anything
Reverse causality
Many omitted determinants
Natural bias: seeing better institutions in richerplaces
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It is better to look at settlers mortality
ratesThe main causes of settler mortality - malaria
and yellow fever did not hurt local
population as much
They did not influence local economy onlythe institutions imposed by the foreigners.
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Least-squares estimates
R - current institutionsC - early institutions
S - settlements
M - mortality rate
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In Simple English:
Current institutions depend on early
institutions.
Early institutions depend on the European
settlements
European settlements depend on mortality
rate
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Current institutions depend on early
institutions
Dependant variable is protection against
expropriation risk in 1985 - 1995
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European settlements depend on
mortality rate
Dependant variable is Europeansettlements in 1900
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Current institutions depend on
mortality rate
Dependant variable is protection againstexpropriation risk in 1985 - 1995
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Robustness
AJR also control for:
latitude
humidity
quality of soil
temperature
ethnolinguistic fragmentation etc.
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Conclusion
This findings reveal that colonial
regime is one of the important factors
that determine modern institutionsand wealth of nations.
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