Factor Endowments, Inequality, and Paths of Development Among New World Economics

Abstract

We would like to express deep appreciation for the help of our research assistants Elisa Mariscal, Patricia Juarez, and Leah Brooks. We have also benefited from discussions with Stephen Haber, Daron Acemoglu, George ABSTRACTWhereas traditional explanations of differences in long-run paths of development across the Americas generally point to the significance of differences in national heritage or religion, we highlight the relevance of stark contrasts in the degree of inequality in wealth, human capital, and political power in accounting for how fundamental economic institutions evolved over time.We argue, moreover, that the roots of these disparities in the extent of inequality lay in differences in the initial factor endowments (dating back to the era of European colonization).We document --through comparative studies of suffrage, public land, and schooling policies --systematic patterns by which societies in the Americas that began with more extreme inequality or heterogeneity in the population were more likely to develop institutional structures that greatly advantaged members of elite classes (and disadvantaging the bulk of the population) by providing them with more political influence and access to economic opportunities. The clear implication is that institutions should not be presumed to be exogenous; economists need to learn more about where they come from to understand their relation to economic development. Our findings not only contribute to our knowledge of why extreme differences in the extent of inequality across New World economies have persisted for centuries, but also to the study of processes of long-run economic growth past and present.

International migration and the role of institutions

“…Political institutions, for instance, were far more advanced in North America than in Europe, while Latin America took from the beginning very different routes of development, as reported by Engerman and Sokoloff (2002). Within the Old World, during the decades under consideration there is also considerable variation, both across countries and over time, with a general evolution toward democratization and a gradual extension of the voting franchise, which can be explained by the pressure of social unrest and by the need of modernization, as suggested by Acemoglu and Robinson (2000) and by Lizzeri and Persico (2004), respectively.…”

The long-run impact of human capital on innovation and economic development in the regions of Europe

“…Many theories have been developed to better understand the causes and consequences of economic development and growth. For example, some of the most important fundamental factors for long-run growth are the quality of institutions (e.g., North 1981;Acemoglu, Johnson, and Robinson 2005) and geography and naturally given geographical conditions (e.g., Diamond 1997;Engerman and Sokoloff 2000). Approximate causes of growth include income inequality (e.g., Alesina andRodrik 1994, Persson andTabellini 1994), land inequality (e.g., Galor, Moav, and Vollrath 2009) and human capital accumulation (Galor and Moav 2002;Glaeser et al 2004).…”

Desigualdad y especialización en el crecimiento de las economías templadas de nuevo asentamiento, 1870–1940

“…6 Las obras más relacionadas con la temática son La industrialización trunca de Amé-rica Latina, de 1983 y La industrialización de América Latina: de la «caja negra» al «casillero vacío», de 1987. 7 Dando lugar a instituciones opresivas diseñadas para dar persistencia a la desigualdad (Engerman & Sokolof, 2002) o de tipo extractivo desde su origen colonial (Acemoglu, Johnson & Robinson, 2002).…”