Investigation"
BY: DARON ACEMOGLU
Massachusetts Institute of Technology (MIT)
Department of Economics
National Bureau of Economic Research (NBER)
SIMON JOHNSON
Massachusetts Institute of Technology (MIT)
Sloan School of Management
JAMES A. ROBINSON
University of California at Berkeley
Department of Political Science
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=244582
Paper ID: MIT Dept. of Economics Working Paper No. 00-22
Date: September 2000
Contact: DARON ACEMOGLU
Email: Mailto:daron at mit.edu
Postal: Massachusetts Institute of Technology (MIT)
Department of Economics
E52-280b
50 Memorial Drive
Cambridge, MA 02142 USA
Phone: 617-253-1927
Fax: 617-253-1330
Co-Auth: SIMON JOHNSON
Email: Mailto:sjohnson at mit.edu
Postal: Massachusetts Institute of Technology (MIT)
Sloan School of Management
Room E52-562
50 Memorial Drive
Cambridge, MA 02142 USA
Co-Auth: JAMES A. ROBINSON
Email: Mailto:jamesar at socrates.berkeley.edu
Postal: University of California at Berkeley
Department of Political Science
210 Barrows Hall
Berkeley, CA 94720
ABSTRACT:
We exploit differences in the mortality rates faced by European
colonialists to estimate the effect of institutions on economic
performance. Our argument is that Europeans adopted very
different colonization policies in different colonies, with
different associated institutions. The choice of colonization
strategy was, at least in part, determined by whether Europeans
could settle in the colony. In places where Europeans faced high
mortality rates, they could not settle and they were more likely
to set up worse (extractive) institutions. These early
institutions persisted to the present. We document evidence
supporting these hypotheses. Exploiting differences in mortality
rates faced by soldiers, bishops and sailors in the colonies in
the 17th, 18th, and 19th centuries as an instrument for current
institutions, we estimate large effects of institutions on
income per capita. Our estimates imply that differences in
institutions explain approximately three-quarters of the income
per capita differences across former colonies. Once we control
for the effect of institutions, we find that countries in Africa
or those closer to the equator do not have lower incomes.
JEL Classification: O1, P1