How deep are the roots of current economic development?


There are two big questions floating around here. First, are countries (or populations, or regions) rich because of some persistent characteristic that can be traced backwards through history? Second, are those characteristics determined by geography, institutions, culture, or just plain luck?

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Academic References

  1. Acemoglu, D. et al. (2011) “The Consequences of Radical Reform: The French Revolution,” American Economic Review, 101(7), pp. 3286–3307.
    • Abstract

      The French Revolution had a momentous impact on neighboring countries. It removed the legal and economic barriers protecting oligarchies, established the principle of equality before the law, and prepared economies for the new industrial opportunities of the second half of the 19th century. We present within-Germany evidence on the long-run implications of these institutional reforms. Occupied areas appear to have experienced more rapid urbanization growth, especially after 1850. A two-stage least squares strategy provides evidence consistent with the hypothesis that the reforms instigated by the French had a positive impact on growth.

  2. Acemoglu, D. and Johnson, S. (2005) “Unbundling Institutions,” Journal of Political Economy, 113(5), pp. 949–995.
    • Abstract

      This paper evaluates the importance of “property rights institutions,” which protect citizens against expropriation by the government and powerful elites, and “contracting institutions,” which enable private contracts between citizens. We exploit exogenous variation in both types of institutions driven by colonial history and document strong first-stage relationships between property rights institutions and the determinants of European colonization strategy (settler mortality and population density before colonization) and between contracting institutions and the identity of the colonizing power. Using this instrumental variable approach, we find that property rights institutions have a first-order effect on long-run economic growth, investment, and financial development. Contracting institutions appear to matter only for the form of financial intermediation. A possible explanation for this pattern is that individuals often find ways of altering the terms of their formal and informal contracts to avoid the adverse effects of weak contracting institutions but find it harder to mitigate the risk of expropriation in this way.

  3. Acemoglu, D., Johnson, S. and Robinson, J. (2005) “The Rise of Europe: Atlantic Trade, Institutional Change, and Economic Growth,” The American Economic Review. American Economic Association, 95(3), pp. pp. 546–579. Available at: Link.
    • Abstract

      The rise of Western Europe after 1500 is due largely to growth in countries with access to the Atlantic Ocean and with substantial trade with the New World, Africa, and Asia via the Atlantic. This trade and the associated colonialism affected Europe not only directly, but also indirectly by inducing institutional change. Where "initial" political institutions (those established before 1500) placed significant checks on the monarchy, the growth of Atlantic trade strengthened merchant groups by constraining the power of the monarchy, and helped merchants obtain changes in institutions to protect property rights. These changes were central to subsequent economic growth.

  4. Acemoglu, D., Johnson, S. and Robinson, J. (2002) “Reversal of fortune: geography and development in the making of the modern world income distribution,” Quarterly Journal of Economics, 117(4), pp. 1231–1294.
    • Abstract

      Among countries colonized by European powers during the past 500 years, those that were relatively rich in 1500 are now relatively poor. We document this reversal using data on urbanization patterns and population density, which, we argue, proxy for economic prosperity. This reversal weighs against a view that links economic development to geographic factors. Instead, we argue that the reversal reflects changes in the institutions resulting from European colonialism. The European intervention appears to have created an "institutional reversal" among these societies, meaning that Europeans were more likely to introduce institutions encouraging investment in regions that were previously poor. This institutional reversal accounts for the reversal in relative incomes. We provide further support for this view by documenting that the reversal in relative incomes took place during the late eighteenth and early nineteenth centuries, and resulted from societies with good institutions taking advantage of the opportunity to industrialize.

  5. Acemoglu, D., Johnson, S. and Robinson, J. (2001) “The colonial origins of economic development: an empirical investigation,” American Economic Review, 91(5), pp. 1369–1401.
    • Abstract

      We exploit differences in European mortality rates to estimate the effect of institutions on economic performance. Europeans adopted very different colonization policies in different colonies, with different associated institutions. In places where Europeans faced high mortality rates, they could not settle and were more likely to set up extractive institutions. These institutions persisted to the present. Exploiting differences in European mortality rates as an instrument for current institutions, we estimate large effects of institutions on income per capita. Once the effect of institutions is controlled for, countries in Africa or those closer to the equator do not have lower incomes.

  6. Acemoglu, D. and Robinson, J. (2012) Why Nations Fail: The Origins of Power, Prosperity, and Poverty. New York, NY: Crown Publishers.
  7. Acemoglu, D. and Robinson, J. (2005) Economic Origins of Dictatorship and Democracy. Cambridge, UK: Cambridge University Press.
  8. Acemoglu, D. and Robinson, J. A. (2000) “Political losers as a barrier to economic development,” The American Economic Review. JSTOR, 90(2), pp. 126–130.
  9. Acemoglu, D. and Robinson, J. A. (2000) “Why did the West Extend the Franchise? Democracy, Inequality, and Growth in Historical Perspective,” Quarterly Journal of Economics. MIT Press, 115(4), pp. 1167–1199.
    • Abstract

      During the nineteenth century most Western societies extended voting rights, a decision that led to unprecedented redistributive programs. We argue that these political reforms can be viewed as strategic decisions by the political elite to prevent widespread social unrest and revolution. Political transition, rather than redistribution under existing political institutions, occurs because current transfers do not ensure future transfers, while the extension of the franchise changes future political equilibria and acts as a commitment to redistribution. Our theory also offers a novel explanation for the Kuznets curve in many Western economies during this period, with the fall in inequality following redistribution due to democratization.

  10. Albouy, D. (2012) “The Colonial Origins of Comparative Development: An Empirical Investigation: Comment,” American Economic Review, 102(6), pp. 3059–3076.
    • Abstract

      In a seminal contribution, Acemoglu, Johnson, and Robinson (2001) evaluate the effect of property rights institutions on national income using estimated mortality rates of early European settlers as an instrument for the risk of capital expropriation. Returning to their original sources, I find the settler mortality data suffer from a number of inconsistencies, comparability problems, and questionable geographic assignments. When various methods are used to deal with these issues, the first-stage relationship between mortality and expropriation risk is no longer robust and typically insignificant. Consequently instrumental variable estimates are unreliable and suffer from weak instrument pathologies.

  11. Alesina, A. et al. (2003) “Fractionalization,” Journal of Economic Growth, 8(2), pp. 155–194. Available at: Link.
    • Abstract

      We provide new measures of ethnic, linguistic, and religious fractionalization for about 190 countries. These measures are more comprehensive than those previously used in the economics literature and we compare our new variables with those previously used. We also revisit the question of the effects of ethnic, linguistic, and religious heterogeneity on the quality of institutions and growth. We partly confirm and partly modify previous results. The patterns of cross-correlations between potential explanatory variables and their different degree of endogeneity makes it hard to make unqualified statements about competing explanations for economic growth and the quality of government. Our new data, which features the underlying group structure of ethnicities, religions and languages, also allows the computation of alternative measures of heterogeneity, and we turn to measures of polarization as an alternative to the commonly used index of fractionalization. Copyright 2003 by Kluwer Academic Publishers

  12. Alesina, A., Giuliano, P. and Nunn, N. (2013) “On the Origins of Gender Roles: Women and the Plough,” The Quarterly Journal of Economics, 128(2), pp. 469–530. Available at: Link.
    • Abstract

      The study examines the historical origins of existing cross-cultural differences in beliefs and values regarding the appropriate role of women in society. We test the hypothesis that traditional agricultural practices influenced the historical gender division of labor and the evolution of gender norms. We find that, consistent with existing hypotheses, the descendants of societies that traditionally practiced plough agriculture today have less equal gender norms, measured using reported gender-role attitudes and female participation in the workplace, politics, and entrepreneurial activities. Our results hold looking across countries, across districts within countries, and across ethnicities within districts. To test for the importance of cultural persistence, we examine the children of immigrants living in Europe and the United States. We find that even among these individuals, all born and raised in the same country, those with a heritage of traditional plough use exhibit less equal beliefs about gender roles today. JEL Codes: D03, J16, N30. Copyright 2013, Oxford University Press.

  13. Alesina, A., Giuliano, P. and Nunn, N. (2011) “Fertility and the Plough,” NBER Working Papers, (16718).
    • Abstract

      The current study finds that societies which historically engaged in plough agriculture today have lower fertility. We argue, and provide ethnographic evidence, that the finding is explained by the fact that with plough agriculture, children, like women, are relatively less useful in the field. The plough requires strength and eliminates the need for weeding, a task particularly suitable for women and children. This in turn generates a preference for fewer children, lowering fertility.

  14. Algan, Y. and Cahuc, P. (2010) “Inherited Trust and Growth,” American Economic Review, 100(5), pp. 2060–92. Available at: Link.
    • Abstract

      This paper develops a new method to uncover the causal effect of trust on economic growth by focusing on the inherited component of trust and its time variation. We show that inherited trust of descendants of US immigrants is significantly influenced by the country of origin and the timing of arrival of their forebears. We thus use the inherited trust of descendants of US immigrants as a time-varying measure of inherited trust in their country of origin. This strategy allows to identify the sizeable causal impact of inherited trust on worldwide growth during the twentieth century by controlling for country fixed effects. (JEL N11, N12, N31, N32, O47, Z13)

  15. Allen, R. C. (2009) “Agricultural productivity and rural incomes in England and the Yangtze Delta, c.1620-c.1820,” Economic History Review, 62(3), pp. 525–550. Available at: Link.
    • Abstract

      No abstract is available for this item.

  16. Alsan, M. (2015) “The Effect of the TseTse Fly on African Development,” American Economic Review, 105(1), pp. 382–410. doi: 10.1257/aer.20130604.
    • Abstract

      The TseTse fly is unique to Africa and transmits a parasite harmful to humans and lethal to livestock. This paper tests the hypothesis that the TseTse reduced the ability of Africans to generate an agricultural surplus historically. Ethnic groups inhabiting TseTse-suitable areas were less likely to use domesticated animals and the plow, less likely to be politically centralized, and had a lower population density. These correlations are not found in the tropics outside of Africa, where the fly does not exist. The evidence suggests current economic performance is affected by the TseTse through the channel of precolonial political centralization. (JEL I12, N57, O13, O17, Q12, Q16, Q18)

  17. Alston, L. J., Harris, E. and Mueller, B. (2009) De Facto and De Jure Property Rights: Land Settlement and Land Conflict on the Australian, Brazilian and U.S. Frontiers. NBER Working Papers 15264. National Bureau of Economic Research, Inc. Available at: Link.
    • Abstract

      We present a conceptual framework to better understand the interaction between settlement and the emergence of de facto property rights on frontiers prior to governments establishing and enforcing de jure property rights. In this framework, potential rents associated with more exclusivity drives "demand" for commons arrangements but demand is not a sufficient explanation; norms and politics matter. At some point enhanced scarcity will drive demand for more exclusivity beyond which can be sustained with commons arrangements. Claimants will therefore petition government for de jure property rights to their claims - formal titles. Land conflict will be minimal when governments supply property rights to first possessors. But, governments may not allocate de jure rights to these claimants because they face differing political constituencies. Moreover, governments may assign de jure rights but be unwilling to enforce the right. This generates potential or actual conflict over land depending on the violence potentials of de facto and de jure claimants. We examine land settlement and conflict on the frontiers of Australia, the U.S. and Brazil. We are interested in examining the emergence, sustainability, and collapse of commons arrangements in specific historical contexts. Our analysis indicates the emergence of de facto property rights arrangements will be relatively peaceful where claimants have reasons to organize collectively (Australia and the U.S.). The settlement process will be more prone to conflict when fewer collective activities are required. Consequently, claimants resort to periodic violent self-enforcement or third party enforcement (Brazil). In all three cases the movement from de facto to de jure property rights led to potential or actual conflict because of insufficient government enforcement.

  18. Andersen, T. B., Dalgaard, C.-J. and Selaya, P. (2016) “Climate and the Emergence of Global Income Differences,” Review of Economic Studies, 83(4), pp. 1334–1363. Available at: Link.
    • Abstract

      The latitude gradient in comparative development is a striking fact: as one moves away from the equator, economic activity rises. While this regularity is well known, it is not well understood. Perhaps the strongest correlate of (absolute) latitude is the intensity of ultraviolet radiation (UV-R), which epidemiological research has shown to be a cause of a wide range of diseases. We establish that UV-R is strongly and negatively correlated with economic activity, both across and within countries. We propose and test a mechanism that links UV-R to current income differences via the impact of disease ecology on the timing of the take-off to sustained growth.

  19. Andersen, T. B., Jensen, P. S. and Skovsgaard, C. V. (2016) “The heavy plow and the agricultural revolution in Medieval Europe,” Journal of Development Economics, 118(C), pp. 133–149. doi: 10.1016/j.jdeveco.2015.08.
    • Abstract

      This research sheds new light on the much-debated link between agricultural productivity and development. We do so by estimating the causal impact of a large shock to agricultural productivity—the introduction of the heavy plow in the Middle Ages—on long run development. We build on the work of Lynn White, Jr. (1962), who argued that it was impossible to take proper advantage of the fertile clay soils of Northern Europe prior to the invention and widespread adoption of the heavy plow. We implement the test in a difference-in-difference set-up by exploiting regional variation in the presence of fertile clay soils. Using a high quality dataset for Denmark, we find that historical counties with relatively more fertile clay soil experienced higher urbanization after the heavy plow had its breakthrough, which was around AD 1000. We obtain a similar result, when we extend the test to European regions. Our findings substantiate that agricultural productivity can be an important driver of long-run development.

  20. Ashraf, Q. and Galor, O. (2013) “Genetic Diversity and the Origins of Cultural Fragmentation,” American Economic Review, 103(3), pp. 528–33. Available at: Link.
    • Abstract

      The origin of the uneven distribution of ethnic and cultural fragmentation across countries has been underexplored, despite the importance attributed to the effects of diversity on the stability and prosperity of nations. Building on the role of deeply-rooted biogeographical forces in comparative development, this research empirically demonstrates that genetic diversity, predominantly determined during the prehistoric "out of Africa" migration of humans, is an underlying cause of various existing manifestations of ethnolinguistic heterogeneity. Further research may revolutionize our understanding of how economic development and the composition of human capital across the globe are affected by these deeply-rooted factors.

  21. Ashraf, Q. and Galor, O. (2013) “The ‘Out of Africa’ Hypothesis, Human Genetic Diversity, and Comparative Economic Development,” American Economic Review, (1), pp. 1–46.
    • Abstract

      This research advances and empirically establishes the hypothesis that, in the course of the prehistoric exodus of Homo sapiens out of Africa, variation in migratory distance to various settlements across the globe affected genetic diversity and has had a persistent hump-shaped effect on comparative economic development, reflecting the trade-off between the beneficial and the detrimental effects of diversity on productivity. While the low diversity of Native American populations and the high diversity of African populations have been detrimental for the development of these regions, the intermediate levels of diversity associated with European and Asian populations have been conducive for development.

  22. Ashraf, Q. and Galor, O. (2011) “Dynamics and stagnation in the malthusian epoch,” American Economic Review, 101(5), pp. 2003–41.
    • Abstract

      This paper examines the central hypothesis of the influential Malthusian theory, according to which improvements in the technological environment during the preindustrial era had generated only temporary gains in income per capita, eventually leading to a larger, but not significantly richer, population. Exploiting exogenous sources of cross-country variations in land productivity and the level of technological advancement, the analysis demonstrates that, in accordance with the theory, technological superiority and higher land productivity had significant positive effects on population density but insignificant effects on the standard of living, during the time period 1-1500 CE.

  23. Ashraf, Q. and Michalopoulos, S. (2015) “Climatic Fluctuations and the Diffusion of Agriculture,” The Review of Economics and Statistics, 97(3), pp. 589–609. Available at: Link.
    • Abstract

      This research examines the climatic origins of the diffusion of Neolithic agriculture across countries and archaeological sites. The theory suggests that a foraging society’s history of climatic shocks shaped the timing of its adoption of farming. Specifically, as long as climatic disturbances did not lead to a collapse of the underlying resource base, the rate at which hunter-gatherers were climatically propelled to experiment with their habitats determined the accumulation of tacit knowledge complementary to farming. Consistent with the proposed hypothesis, the empirical investigation demonstrates that, conditional on biogeographic endowments, climatic volatility has a hump-shaped effect on the timing of the adoption of agriculture.

  24. Balk, D. L. et al. (2006) “Determining Global Population Distribution: Methods, Applications and Data,” Advances in Parasitology, 62, pp. 119–156. Available at: Link.
  25. Banerjee, A. and Iyer, L. (2005) “History, Institutions, and Economic Performance: The Legacy of Colonial Land Tenure Systems in India,” The American Economic Review. American Economic Association, 95(4), pp. pp. 1190–1213. Available at: Link.
    • Abstract

      We analyze the colonial land revenue institutions set up by the British in India, and show that differences in historical property rights institutions lead to sustained differences in economic outcomes. Areas in which proprietary rights in land were historically given to landlords have significantly lower agricultural investments and productivity in the post-independence period than areas in which these rights were given to the cultivators. These areas also have significantly lower investments in health and education. These differences are not driven by omitted variables or endogeneity problems; they probably arise because differences in historical institutions lead to very different policy choices.

  26. Banerjee, A. V. and Duflo, E. (2003) “Inequality and Growth: What Can the Data Say?,” Journal of Economic Growth. Springer Netherlands, 8(3), pp. 267–299. Available at: Link.
    • Abstract

      This paper describes the correlations between inequality and the growth rates in cross-country data. Using non-parametric methods, we show that the growth rate is an inverted U-shaped function of net changes in inequality: changes in inequality (in any direction) are associated with reduced growth in the next period. The estimated relationship is robust to variations in control variables and estimation methods. This inverted U-curve is consistent with a simple political economy model but it could also reflect the nature of measurement errors, and, in general, efforts to interpret this evidence causally run into difficult identification problems. We show that this non-linearity is sufficient to explain why previous estimates of the relationship between the level of inequality and growth are so different from one another.

  27. Barrios, S., Bertinelli, L. and Strobl, E. (2010) “Trends in Rainfall and Economic Growth in Africa: A Neglected Cause of the African Growth Tragedy,” The Review of Economics and Statistics, 92(2), pp. 350–366. Available at: Link.
    • Abstract

      We examine the role of rainfall trends in poor growth performance of sub-Saharan African nations relative to other developing countries, using a new cross-country panel climatic data set in an empirical economic growth framework. Our results show that rainfall has been a significant determinant of poor economic growth for African nations but not for other countries. Depending on the benchmark measure of potential rainfall, we estimate that the direct impact under the scenario of no decline in rainfall would have resulted in a reduction of between around 15% and 40% of today’s gap in African GDP per capita relative to the rest of the developing world. \copyright 2010 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

  28. Bisin, A. and Verdier, T. (2017) On the Joint Evolution of Culture and Institutions. Working Paper 23375. National Bureau of Economic Research. doi: 10.3386/w23375.
    • Abstract

      Explanations of economic growth and prosperity commonly identify a unique causal effect, e.g., institutions, culture, human capital, geography. In this paper we provide instead a theoretical modeling of the interaction between culture and institutions and their effects on economic activity. We characterize conditions on the socio-economic environment such that culture and institutions complement (resp. substitute) each other, giving rise to a multiplier effect which amplifies (resp. dampens) their combined ability to spur economic activity. We show how the joint dynamics of culture and institutions may display interesting non-ergodic behavior, hysteresis, oscillations, and comparative dynamics. Finally, in specific example societies, we study how culture and institutions interact to determine the sustainability of extractive societies as well as the formation of civic capital and of legal systems protecting property rights.

  29. Bleakley, H. and Lin, J. (2012) “Portage and Path Dependence,” The Quarterly Journal of Economics, 127(2), pp. 587–644. Available at: Link.
    • Abstract

      Many cities in North America formed at obstacles to water navigation, where continued transport required overland hauling or portage. Portage sites attracted commerce and supporting services, and places where the falls provided water power attracted manufacturing during early industrialization. We examine portage sites in the U.S. South, Mid-Atlantic, and Midwest, including those on the fall line, a geomorphological feature in the southeastern United States marking the final rapids on rivers before the ocean. Although their original advantages have long since become obsolete, we document the continuing importance of historical portage sites. We interpret these results as path dependence and contrast explanations based on sunk costs interacting with decreasing versus increasing returns to scale. Copyright 2012, Oxford University Press.

  30. Bloom, N., Sadun, R. and Reenen, J. van (2012) “The Organization of Firms Across Countries,” Quarterly Journal of Economics, 127(4), pp. 1663–1705.
    • Abstract

      We argue that social capital as proxied by trust increases aggregate productivity by affecting the organization of firms. To do this we collect new data on the decentralization of investment, hiring, production, and sales decisions from corporate headquarters to local plant managers in almost 4,000 firms in the United States, Europe, and Asia. We find that firms headquartered in high-trust regions are significantly more likely to decentralize. To help identify causal effects, we look within multinational firms and show that higher levels of bilateral trust between the multinational’s country of origin and subsidiary’s country of location increases decentralization, even after instrumenting trust using religious similarities between the countries. Finally, we show evidence suggesting that trust raises aggregate productivity by facilitating reallocation between firms and allowing more efficient firms to grow, as CEOs can decentralize more decisions.

  31. Bray, F. (1994) The Rice Economies, Technology and Development in Asian Societies. Berkeley, CA: University of California Press.
  32. Bruhn, M. and Gallego, F. A. (2012) “Good, Bad, and Ugly Colonial Activities: Do they matter for Economic Development?,” Review of Economics and Statistics, 94(2), pp. 433–461.
    • Abstract

      Levels of development vary widely within countries in the Amer- icas. We argue that part of this variation has its roots in the colonial era, when colonizers engaged in different economic activities in different regions of a country. We present evidence consistent with the view that “bad” activities (those that depended heavily on labor exploitation) led to lower economic development today than “good” activities (those that did not rely on labor exploitation). Our results also suggest that differences in political repre- sentation (but not in income inequality or human capital) could be the intermediating factor between colonial activities and current development.

  33. Cantoni, D. (2010) The economic effects of the Protestant Reformation: Testing the Weber hypothesis in the German Lands. Economics Working Papers 1260. Department of Economics and Business, Universitat Pompeu Fabra. Available at: Link.
    • Abstract

      Many theories, most famously Max Weber’s essay on the “Protestant ethic,” have hypothesized that Protestantism should have favored economic development. With their considerable religious heterogeneity and stability of denominational affiliations until the 19th century, the German Lands of the Holy Roman Empire present an ideal testing ground for this hypothesis. Using population figures in a dataset comprising 272 cities in the years 1300–1900, I find no effects of Protestantism on economic growth. The finding is robust to the inclusion of a variety of controls, and does not appear to depend on data selection or small sample size. In addition, Protestantism has no effect when interacted with other likely determinants of economic development. I also analyze the endogeneity of religious choice; instrumental variables estimates of the effects of Protestantism are similar to the OLS results.

  34. Cantoni, D. and Yuchtman, N. (2012) Medieval Universities, Legal Institutions, and the Commercial Revolution. NBER Working Papers 17979. National Bureau of Economic Research, Inc. Available at: Link.
    • Abstract

      We present new data documenting medieval Europe’s "Commercial Revolution” using information on the establishment of markets in Germany. We use these data to test whether medieval universities played a causal role in expanding economic activity, examining the foundation of Germany’s first universities after 1386 following the Papal Schism. We find that the trend rate of market establishment breaks upward in 1386 and that this break is greatest where the distance to a university shrank most. There is no differential pre-1386 trend associated with the reduction in distance to a university, and there is no break in trend in 1386 where university proximity did not change. These results are not affected by excluding cities close to universities or cities belonging to territories that included universities. Universities provided training in newly-rediscovered Roman and Canon law; students with legal training served in positions that reduced the uncertainty of trade in medieval Europe. We argue that training in the law, and the consequent development of legal and administrative institutions, was an important channel linking universities and greater economic activity.

  35. Chanda, A., Cook, C. J. and Putterman, L. (2014) “Persistence of Fortune: Accounting for Population Movements, There Was No Post-Columbian Reversal,” American Economic Journal: Macroeconomics, 6(3), pp. 1–28. Available at: Link.
    • Abstract

      Using data on place of origin of today’s country populations and the indicators of level of development in 1500 used by Acemoglu, Johnson, and Robinson (2002), we confirm a reversal of fortune for colonized countries as territories, but find persistence of fortune for people and their descendants. Persistence results are at least as strong for three alternative measures of early development, for which reversal for territories, however, fails to hold. Additional exercises lend support to Glaeser et al.’s (2004) view that human capital is a more fundamental channel of influence of precolonial conditions on modern development than is quality of institutions.

  36. Comin, D., Easterly, W. and Gong, E. (2010) “Was the Wealth of Nations Determined in 1000 BC?,” American Economic Journal: Macroeconomics. American Economic Association, 2(3), pp. pp. 65–97. Available at: Link.
    • Abstract

      We assemble a dataset on technology adoption in 1000 BC, 0 AD, and 1500 AD for the predecessors to today’s nation states. Technological differences are surprisingly persistent over long periods of time. Our most interesting, strong, and robust results are for the association of 1500 AD technology with per capita income and technology adoption today. We also find robust and significant technological persistence from 1000 BC to 0 AD, and from 0 AD to 1500 AD. The evidence is consistent with a model where the cost of adopting new technologies declines sufficiently with the current level of adoption.

  37. Cook, C. J. (2015) “The Natural Selection of Infectious Disease Resistance and Its Effect on Contemporary Health,” Review of Economics and Statistics.
    • Abstract

      This paper empirically tests the association between genetically determined resistance to infectious disease and cross-country health differences. A country-level measure of genetic diversity for the system of genes associated with the recognition and disposal of foreign pathogens is constructed. Genetic diversity within this system has been shown to reduce the virulence and prevalence of infectious diseases and is hypothesized to have been naturally selected from historical exposure to infectious pathogens. Base estimation shows a statistically strong, robust, and positive relationship between this constructed measure and country-level health outcomes in times prior to, but not after, the international epidemiological transition.

  38. Cook, C. J. (2014) “The role of lactase persistence in precolonial development,” Journal of Economic Growth. Springer, 19(4), pp. 369–406.
  39. Cook, C. J. (2014) “Potatoes, milk, and the Old World population boom,” Journal of Development Economics, 110(C), pp. 123–138. Available at: Link.
    • Abstract

      This paper explores the role of two foods, potatoes and milk, in explaining the increase in economic development experienced throughout the Old World in the 18th and 19th centuries. Nunn and Qian (2011) show the introduction of the potato from the New World has a significant explanatory role for within country population and urbanization growth over this period. I expand on this by considering the role of milk consumption, which is hypothesized to be a complement in diet to potatoes due to a differential composition of essential nutrients. Using a country-level measure for the suitability of milk consumption, the frequency of lactase persistence, I show that the marginal effect of potatoes on post-1700 population and urbanization growth is positively related to milk consumption. As the frequency of milk consumption approaches unity, the marginal effect of potatoes more than doubles in magnitude compared to the baseline estimate of Nunn and Qian.

  40. Cronqvist, H. and Siegel, S. (2015) “The Origins of Savings Behavior,” Journal of Political Economy. The University of Chicago Press, 123(1), pp. pp. 123–169. Available at: Link.
    • Abstract

      Analyzing the savings behavior of a large sample of identical and fraternal twins, we find that genetic differences explain about 33 percent of the variation in savings propensities across individuals. Individuals are born with a persistent genetic predisposition to a specific savings behavior. Parenting contributes to the variation in savings rates among younger individuals, but its effect decays over time. The environment when growing up (e.g., parents’ wealth) moderates genetic effects. Finally, savings behavior is genetically correlated with income growth, smoking, and obesity, suggesting that the genetic component of savings behavior reflects genetic variation in time preferences or self-control.

  41. Dalgaard, C.-J., Knudsen, A. S. B. and Selaya, P. (2015) The Bounty of the Sea and Long-Run Development. CESifo Working Paper Series 5547. CESifo Group Munich. Available at: Link.
    • Abstract

      What is the long run impact on development from differences in subsistence strategies during pre-industrial times? Whereas this question has been explored from the point of view of agriculture, remarkably little attention has been paid to the complementary strategy of relying on marine resources. As a step towards closing this gap, we construct an index - the Bounty of the Sea index - which captures the potential abundance of exploitable marine fish that individual countries have had access to, and proceed to explore its correlation with economic development. Our analysis reveals that a greater Bounty of the Sea stimulated pre-industrial development, and that countries inhabited by people with ancestry in regions with abundant marine resources are richer today. Probing possible underlying reasons, we find that populations with ancestry in regions rich in marine resources differ from societies with a purely agrarian legacy in terms of institutions, cultural values and average personality traits.

  42. De Long, J. B. and Shleifer, A. (1993) “Princes and Merchants: European City Growth before the Industrial Revolution,” Journal of Law and Economics, 36(2), pp. 671–702. Available at: Link.
  43. Croix, D. De la and Doepke, M. (2009) “To segregate or to integrate: Education politics and democracy,” Review of Economic Studies. Wiley Online Library, 76(2), pp. 597–628.
    • Abstract

      How is the quality of public education affected by the presence of private schools for the rich? Theory and evidence suggest that the link depends crucially on the political system. We develop a theory that integrates private education and fertility decisions with voting on public schooling expenditures. We find that the presence of a large private education sector benefits public schools in a broad-based democracy where politicians are responsive to low-income families but crowds out public education spending in a society that is politically dominated by the rich. The main predictions of the theory are consistent with state-level data and micro data from the U.S. as well as cross-country evidence from the Programme for International Student Assessment study.

  44. Dell, M. (2010) “The Persistent Effect of Peru’s Mining Mita,” Econometrica, 78(6), pp. 1863–1903.
    • Abstract

      This study utilizes regression discontinuity to examine the long-run impacts of the mita, an extensive forced mining labor system in effect in Peru and Bolivia between 1573 and 1812. Results indicate that a mita effect lowers household consumption by around 25% and increases the prevalence of stunted growth in children by around six percentage points in subjected districts today. Using data from the Spanish Empire and Peruvian Republic to trace channels of institutional persistence, I show that the mita’s influence has persisted through its impacts on land tenure and public goods provision. Mita districts historically had fewer large landowners and lower educational attainment. Today, they are less integrated into road networks, and their residents are substantially more likely to be subsistence farmers.

  45. Dell, M., Jones, B. F. and Olken, B. A. (2012) “Temperature Shocks and Economic Growth: Evidence from the Last Half Century,” American Economic Journal: Macroeconomics, 4(3), pp. 66–95. Available at: Link.
    • Abstract

      This paper uses historical fluctuations in temperature within countries to identify its effects on aggregate economic outcomes. We find three primary results. First, higher temperatures substantially reduce economic growth in poor countries. Second, higher temperatures may reduce growth rates, not just the level of output. Third, higher temperatures have wide-ranging effects, reducing agricultural output, industrial output, and political stability. These findings inform debates over climate’s role in economic development and suggest the possibility of substantial negative impacts of higher temperatures on poor countries. (JEL E23, O13, Q54, Q56)

  46. Di Liberto, A. and Sideri, M. (2015) Past Dominations, Current Institutions and the Italian Regional Economic Performance. IZA Discussion Papers 8776. Institute for the Study of Labor (IZA). Available at: Link.
    • Abstract

      We study the connection between economic performance and the quality of government institutions for the sample of 103 Italian NUTS3 regions, including new measures of institutional performance calculated using data on the provision of different areas of public services. In order to address likely endogeneity problems, we use the histories of the different foreign dominations that ruled Italian regions between the 16th and 17th century and over seven hundred years before the creation of the unified Italian State. Our results suggest that past historical institutions play a significant role on the current public administration quality and show that the latter makes a difference to the economic performance of regions. Overall, our analysis confirms that the quality of institutions matters for development, and that history can be used to find suitable instruments.

  47. Diamond, J. (1997) Guns, Germs, and Steel. New York, NY: W. W. Norton and Co.
  48. Dippel, C., Greif, A. and Trefler, D. (2015) The Rents From Trade and Coercive Institutions: Removing the Sugar Coating. NBER Working Papers 20958. National Bureau of Economic Research, Inc. Available at: Link.
    • Abstract

      The 19th century collapse of world sugar prices should have depressed wages in the British West Indies sugar colonies. It did not. We explain this by showing how lower prices weakened the power of the white planter elite and thus led to an easing of the coercive institutions that depressed wages e.g., institutions that kept land out of the hands of peasants. Using unique data for 14 British West Indies sugar colonies from 1838 to 1913, we examine the impact of the collapse of sugar prices on wages and incarceration rates. We find that in colonies that were poorly suited for sugar cane cultivation (an exogenous colony characteristic), the planter elite declined in power and the institutions they created and supported became less coercive. As a result, wages rose by 20% and incarceration rates per capita were cut in half. In contrast, in colonies that were highly suited for sugar cane there was little change in the power of the planter elite — as a result, institutions did not change, the market-based mechanisms of standard trade theory were salient, and wages fell by 24%. In short, movements in the terms of trade induced changes in coercive institutions, changes that are central for understanding how the terms of trade affects wages.

  49. Easterly, W. (2007) “Inequality Does Cause Underdevelopment: Insights from a New Instrument,” Journal of Development Economics, 84(2), pp. 755–776.
    • Abstract

      Consistent with the provocative hypothesis of Engerman and Sokoloff [Engermann, Stanley and Kenneth Sokoloff (1997), “Factor Endowments, Institutions, and Differential Paths of Growth Among New World Economies: A View from Economic Historians of the United States,” in Stephen Haber, ed. How Latin America Fell Behind, Stanford CA: Stanford University Press., Sokoloff, Kenneth L. and Stanley L. Engerman (2000), Institutions, Factor Endowments, and Paths of Development in the New World, Journal of Economic Perspectives v14, n3, 217–32.], this paper confirms with cross-country data that agricultural endowments predict inequality and inequality predicts development. The use of agricultural endowments –specifically the abundance of land suitable for growing wheat relative to that suitable for growing sugarcane – as an instrument for inequality is this paper’s approach to problems of measurement and endogeneity of inequality. The paper finds inequality also affects other development outcomes – institutions and schooling –which the literature has emphasized as mechanisms by which higher inequality lowers per capita income. It tests the inequality hypothesis for development, institutional quality and schooling against other recent hypotheses in the literature. While finding some evidence consistent with other development fundamentals, the paper finds high inequality to independently be a large and statistically significant barrier to prosperity, good quality institutions, and high schooling.

  50. Easterly, W. and Levine, R. (2003) “Tropics, Germs, and Crops: How Endowments Influence Economic Development,” Journal of Monetary Economics, 50(1), pp. 3–39.
    • Abstract

      Does economic development depend on geographic endowments like temperate instead of tropical location, the ecological conditions shaping diseases, or an environment good for grains or certain cash crops? Or do these endowments of tropics, germs, and crops affect economic development only through institutions or policies? We test the endowment, institution, and policy views against each other using cross country evidence. We find evidence that tropics, germs, and crops affect development through institutions. We find no evidence that tropics, germs, and crops affect country incomes directly other than through institutions, nor do we find any effect of policies on development once we control for institutions.

  51. Elvidge, C. D. et al. (1999) “Radiance Calibration of DMSP-OLS Low-Light Imaging Data of Human Settlements,” Remote Sensing of Environment, 68(1), pp. 77–88. doi: Link.
    • Abstract

      Nocturnal lighting is a primary method for enabling human activity. Outdoor lighting is used extensively worldwide in residential, commercial, industrial, public facilities, and roadways. A radiance calibrated nighttime lights image of the United States has been assembled from Defense Meteorological Satellite Program (DMSP) Operational Linescan System (OLS). The satellite observation of the location and intensity of nocturnal lighting provide a unique view of humanities presence and can be used as a spatial indicator for other variables that are more difficult to observe at a global scale. Examples include the modeling of population density and energy related greenhouse gas emissions.

  52. Enke, B. (2017) Kinship Systems, Cooperation and the Evolution of Culture. Working Paper 23499. National Bureau of Economic Research. doi: 10.3386/w23499.
    • Abstract

      Cultural psychologists and anthropologists argue that societies have developed heterogeneous systems of social organization to cope with social dilemmas, and that an entire bundle of cultural characteristics has coevolved to enforce cooperation within these different systems. This paper develops a measure of the historical tightness of kinship structures to provide empirical evidence for this large body of theories. In the data, societies with loose ancestral kinship ties cooperate and trust broadly, which is apparently sustained through a belief in moralizing gods, universally applicable moral principles, feelings of guilt, and large-scale institutions. Societies with a historically tightly knit kinship structure, on the other hand, exhibit strong in-group favoritism: they cheat on and are distrusting of out-group members, but readily support in-group members in need. This cooperation scheme is enforced by moral values of in-group loyalty, conformity to tight social norms, emotions of shame, and strong local institutions. These relationships hold across historical ethnicities, contemporary countries, ethnicities within countries, and migrants. The results suggest that religious beliefs, language, emotions, morality, and social norms all coevolved to support specific social cooperation systems.

  53. Fenske, J. (2014) “Ecology, Trade, And States In Pre-Colonial Africa,” Journal of the European Economic Association, 12(3), pp. 612–640. Available at: Link.
    • Abstract

      State capacity matters for growth. I test Bates’ explanation of pre-colonial African states. He argues that trade across ecological boundaries promoted states. I find that African societies in ecologically diverse environments had more centralized states. This is robust to reverse causation, omitted heterogeneity, and alternative interpretations of the link between diversity and states. The result survives including non-African societies. I test mechanisms connecting trade to states, and find that trade supported class stratification between rulers and ruled. I underscore the importance of ethnic institutions and inform our knowledge of the effects of trade on institutions.

  54. Fenske, J. (2013) “Does Land Abundance Explain African Institutions?,” Economic Journal, 123(12), pp. 1363–1390. Available at: Link.
    • Abstract

      I show how abundant land and scarce labor shaped African institutions before colonial rule. I present a model in which exogenous suitability of the land for agriculture and endogenously evolving population determine the existence of land rights, slavery, and polygyny. I then use cross-sectional data on pre-colonial African societies to demonstrate that, consistent with the model, the existence of land rights, slavery, and polygyny occurred in those parts of Africa that were the most suitable for agriculture, and in which population density was greatest. Next, I use the model to explain institutions among the Egba of southwestern Nigeria from 1830 to 1914. While many Egba institutions were typical of a land-abundant environment, they sold land and had disputes over it. These exceptions were the result of a period of land scarcity when the Egba first arrived at Abeokuta and of heterogeneity in the quality of land.

      (This abstract was borrowed from another version of this item.)

      </details></li> </ul> </div> </li>
    • Feyrer, J. and Sacerdote, B. (2009) “Colonialism and Modern Income: Islands as Natural Experiments,” The Review of Economics and Statistics. The MIT Press, 91(2), pp. pp. 245–262. Available at: Link.
      • Abstract

        Using a new database of islands throughout the Atlantic, Pacific, and Indian Oceans we find a robust positive relationship between the number of years spent as a European colony and current GDP per capita. We argue that the nature of discovery and colonization of islands provides random variation in the length and type of colonial experience. We instrument for length of colonization using variation in prevailing wind patterns. We argue that wind speed and direction had a significant effect on historical colonial rule but do not have a direct effect on GDP today. The data also suggest that years as a colony after 1700 are more beneficial than earlier years. We also find a discernable pecking order among the colonial powers, with years under U.S., British, French, and Dutch rule having more beneficial effects than Spanish or Portuguese rule. Our finding of a strong connection between modern income and years of colonization is conditional on being colonized at all since each of the islands in our data set spent some time under colonial rule.

    • Frankema, E. and Papaioannou, K. (2017) Rainfall patterns and human settlement in tropical africa and asia compared. Did African farmers face greater insecurity? C.E.P.R. Discussion Papers.
    • Galor, O. and Moav, O. (2006) “Das human-kapital: A theory of the demise of the class structure,” The Review of Economic Studies. Oxford University Press, 73(1), p. 85.
      • Abstract

        This paper hypothesizes that the demise of the 19th century’s European class structure reflects a deliberate transformation of society orchestrated by the capitalists. Contrary to conventional wisdom, it argues that the demise of this class structure was an outcome of a cooperative, rather than divisive process. The research suggests that the transition from this class structure may be viewed as the outcome of an optimal reaction by the capitalists to the increasing importance of human capital in sustaining their profit rates. The paper argues that the process of capital accumulation gradually intensified the importance of skilled labor in the production process and generated an incentive for investment in human capital. Due to the complementarity between physical and human capital in production, the capitalists were among the prime beneficiaries of the accumulation of human capital by the masses. They therefore had the incentive to support public education that would sustain their profit rates and would improve their economic well-being, although it would ultimately undermine their dynasty’s position in the social ladder. The research suggests that Karl Marx’s highly influential prediction about the inevitable class struggle due to declining profit rates stemmed from an under appreciation of the role that human capital would play in the production process. The basic premise of this research, regarding the positive attitude of capitalists towards education reforms, is supported empirically by a newly constructed data set of the voting patterns on England’s education reform proposed in the Balfour Act of 1902.

    • Galor, O. and Moav, O. (2002) “Natural Selection and the Origin of Economic Growth,” Quarterly Journal of Economics. MIT Press, 117(4), pp. 1133–1191.
      • Abstract

        This research develops an evolutionary growth theory that captures the interplay between the evolution of mankind and economic growth since the emergence of the human species. The theory suggests that the struggle for survival that had characterized most of human existence generated an evolutionary advantage to human traits that were complementary to the growth process, triggering the takeoff from an epoch of stagnation to sustained economic growth.

    • Galor, O., Moav, O. and Vollrath, D. (2009) “Inequality in Landownership, the Emergence of Human-Capital Promoting Institutions, and the Great Divergence,” Review of Economic Studies, 76(1), pp. 143–179.   Paper   Data
      • Abstract

        This research suggests that favorable geographical conditions, that were inherently associated with inequality in the distribution of land ownership, adversely affected the implementation of human capital promoting institutions (e.g., public schooling and child labor regulations), and thus the pace and the nature of the transition from an agricultural to an industrial economy, contributing to the emergence of the Great Divergence in income per capita across countries. The basic premise of this research, regarding the negative effect of land inequality on public expenditure on education is established empirically based on cross-state data from the beginning of the 20th century in the United States.

    • Galor, O. and Özak, Ömer (2016) “The Agricultural Origins of Time Preference,” American Economic Review, 106(10), pp. 3064–3103. Available at: Link.
      • Abstract

        This research explores the origins of observed differences in time preference across countries and regions. Exploiting a natural experiment associated with the expansion of suitable crops for cultivation in the course of the Columbian Exchange, the research establishes that pre-industrial agro-climatic characteristics which were conducive to higher return to agricultural investment triggered selection, adaptation, and learning processes that generated a persistent positive effect on the prevalence of long-term orientation in the contemporary era. Furthermore, the research establishes that these agro-climatic characteristics have had a culturally embodied impact on economic behavior such as technological adoption, education, saving, and smoking.

    • Glaeser, E. L. et al. (2004) “Do Institutions Cause Growth?,” Journal of Economic Growth. Springer Netherlands, 9(3), pp. 271–303. Available at: Link.
      • Abstract

        We revisit the debate over whether political institutions cause economic growth, or whether, alternatively, growth and human capital accumulation lead to institutional improvement. We find that most indicators of institutional quality used to establish the proposition that institutions cause growth are constructed to be conceptually unsuitable for that purpose. We also find that some of the instrumental variable techniques used in the literature are flawed. Basic OLS results, as well as a variety of additional evidence, suggest that (a) human capital is a more basic source of growth than are the institutions, (b) poor countries get out of poverty through good policies, often pursued by dictators, and (c) subsequently improve their political institutions.

    • Goldewijk, K. K. et al. (2011) “The HYDE 3.1 spatially explicit database of human-induced global land-use change over the past 12,000 years,” Global Ecology and Biogeography. Blackwell Publishing Ltd, 20(1), pp. 73–86. doi: 10.1111/j.1466-8238.2010.00587.x.
    • Goldstein, M. and Udry, C. (2008) “The Profits of Power: Land Rights and Agricultural Investment in Ghana,” Journal of Political Economy, 116(6), pp. 981–1022. Available at: Link.
      • Abstract

        We examine the impact of ambiguous and contested land rights on investment and productivity in agriculture in Akwapim, Ghana. We show that individuals who hold powerful positions in a local political hierarchy have more secure tenure rights and that as a consequence they invest more in land fertility and have substantially higher output. The intensity of investments on different plots cultivated by a given individual corresponds to that individual’s security of tenure over those specific plots and, in turn, to the individual’s position in the political hierarchy relevant to those specific plots. (c) 2008 by The University of Chicago. All rights reserved..

    • Guiso, L., Sapienza, P. and Zingales, L. (2009) “Cultural Biases in Economic Exchange?,” The Quarterly Journal of Economics. Oxford University Press, 124(3), pp. pp. 1095–1131. Available at: Link.
      • Abstract

        How much do cultural biases affect economic exchange? We answer this question by using data on bilateral trust between European countries. We document that this trust is affected not only by the characteristics of the country being trusted, but also by cultural aspects of the match between trusting country and trusted country, such as their history of conflicts and their religious, genetic, and somatic similarities. We then find that lower bilateral trust leads to less trade between two countries, less portfolio investment, and less direct investment, even after controlling for the characteristics of the two countries. This effect is stronger for goods that are more trust intensive. Our results suggest that perceptions rooted in culture are important (and generally omitted) determinants of economic exchange.

    • Guiso, L., Sapienza, P. and Zingales, L. (2006) “Does Culture Affect Economic Outcomes?,” Journal of Economic Perspectives, 20(2), pp. 23–48. Available at: Link.
      • Abstract

        Until recently, economists have been reluctant to rely on culture as a possible determinant of economic phenomena. Much of this reluctance stems from the very notion of culture: it is so broad and the channels through which it can enter the economic discourse so ubiquitous (and vague) that it is difficult to design testable, refutable hypotheses. In recent years, however, better techniques and more data have made it possible to identify systematic differences in people’s preferences and beliefs and to relate them to various measures of cultural legacy. These developments suggest an approach to introducing culturally-based explanations into economics that can be tested and may substantially enrich our understanding of economic phenomena. This paper summarizes this approach and its achievements so far, and outlines directions for future research.

    • Guiso, L., Sapienza, P. and Zingales, L. (2004) “Does Local Financial Development Matter?,” The Quarterly Journal of Economics. Oxford University Press, 119(3), pp. pp. 929–969. Available at: Link.
      • Abstract

        We study the effects of differences in local financial development within an integrated financial market. We construct a new indicator of financial development by estimating a regional effect on the probability that, ceteris paribus, a household is shut off from the credit market. By using this indicator, we find that financial development enhances the probability an individual starts his own business, favors entry of new firms, increases competition, and promotes growth. As predicted by theory, these effects are weaker for larger firms, which can more easily raise funds outside of the local area. These effects are present even when we instrument our indicator with the structure of the local banking markets in 1936, which, because of regulatory reasons, affected the supply of credit in the following 50 years. Overall, the results suggest local financial development is an important determinant of the economic success of an area even in an environment where there are no frictions to capital movements.

    • Guiso, L., Sapienza, P. and Zingales, L. (2004) “The Role of Social Capital in Financial Development,” The American Economic Review. American Economic Association, 94(3), pp. pp. 526–556. Available at: Link.
      • Abstract

        To identify the effect of social capital on financial development, we exploit social capital differences within Italy. In high-social-capital areas, households are more likely to use checks, invest less in cash and more in stock, have higher access to institutional credit, and make less use of informal credit. The effect of social capital is stronger where legal enforcement is weaker and among less educated people. These results are not driven by omitted environmental variables, since we show that the behavior of movers is still affected by the level of social capital of the province where they were born.

    • Henderson, J. V. et al. (2016) The Global Spatial Distribution of Economic Activity: Nature, History, and the Role of Trade. NBER Working Papers 22145. National Bureau of Economic Research, Inc. Available at: Link.
      • Abstract

        We study the distribution of economic activity, as proxied by lights at night, across 250,000 grid cells of average area 560 square kilometers. We first document that nearly half of the variation can be explained by a parsimonious set of physical geography attributes. A full set of country indicators only explains a further 10%. When we divide geographic characteristics into two groups, those primarily important for agriculture and those primarily important for trade, we find that the agriculture variables have relatively more explanatory power in countries that developed early and the trade variables have relatively more in countries that developed late, despite the fact that the latter group of countries are far more dependent on agriculture today. We explain this apparent puzzle in a model in which two technological shocks occur, one increasing agricultural productivity and the other decreasing transportation costs, and in which agglomeration economies lead to persistence in urban locations. In countries that developed early, structural transformation due to rising agricultural productivity began at a time when transport costs were still relatively high, so urban agglomerations were localized in agricultural regions. When transport costs fell, these local agglomerations persisted. In late developing countries, transport costs fell well before structural transformation. To exploit urban scale economies, manufacturing agglomerated in relatively few, often coastal, locations. With structural transformation, these initial coastal locations grew, without formation of more cities in the agricultural interior.

    • Hornbeck, R. (2010) “Barbed Wire: Property Rights and Agricultural Development,” The Quarterly Journal of Economics, 125(2), pp. 767–810. Available at: Link.
      • Abstract

        This paper examines the impact on agricultural development of the introduction of barbed wire fencing to the American Plains in the late nineteenth century. Without a fence, farmers risked uncompensated damage by others’ livestock. From 1880 to 1900, the introduction and near-universal adoption of barbed wire greatly reduced the cost of fences, relative to the predominant wooden fences, especially in counties with the least woodland. Over that period, counties with the least woodland experienced substantial relative increases in settlement, land improvement, land values, and the productivity and production share of crops most in need of protection. This increase in agricultural development appears partly to reflect farmers’ increased ability to protect their land from encroachment. States’ inability to protect this full bundle of property rights on the frontier, beyond providing formal land titles, might have otherwise restricted agricultural development. (c) 2010 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology..

    • Hoyland, B., Moene, K. and Willumsen, F. (2012) “The Tyranny of International Index Rankings,” Journal of Development Economics, 97, pp. 1–14.
      • Abstract

        International index rankings are popular, but perhaps too persuasive. They emphasize country differences where similarity is the dominant feature. Rankings based on Doing Business, the Human Development Index and Freedom House can be misleading, not because of wrong indicators, but because the estimation of the scores ignores inherent uncertainty. Re-estimated with a method that captures this uncertainty, it becomes clear that ranking every adjacent country is a rather courageous activity.

    • Huning, T. R. and Wahl, F. (2016) You Reap What You Know: Observability of Soil Quality, and Political Fragmentation. Working Papers 0101. European Historical Economics Society (EHES). Available at: Link.
      • Abstract

        We provide a theoretical model linking limits to the observability of soil quality to state rulers’ ability to tax agricultural output, which leads to a higher political fragmentation. We introduce a spatial measure to quantify state planners’ observability in an agricultural society. The model is applied to spatial variation in the 1378 Holy Roman Empire, the area with the highest political fragmentation in European history. We find that differences in the observability of agricultural output explain the size and capacity of states as well as the emergence and longevity of city states. Grid cells with higher observability of agricultural output intersect with a significantly lower number of territories within them. Our results highlight the role of agriculture and geography, for size, political, and economic organization of states. This sheds light on early, though persistent, determinants of industrial development within Germany, and also within Central Europe.

    • Iyer, L. (2010) “Direct versus Indirect Colonial Rule in India: Long-term Consequences,” The Review of Economics and Statistics. The MIT Press, 92(4), pp. pp. 693–713. Available at: Link.
      • Abstract

        This paper compares economic outcomes across areas in India that were under direct British colonial rule with areas that were under indirect colonial rule. Controlling for selective annexation using a specific policy rule, I find that areas that experienced direct rule have significantly lower levels of access to schools, health centers, and roads in the postcolonial period. I find evidence that the quality of governance in the colonial period has a significant and persistent effect on postcolonial outcomes.

    • Johnson, S., McMillan, J. and Woodruff, C. (2002) “Property Rights and Finance,” The American Economic Review. American Economic Association, 92(5), pp. pp. 1335–1356. Available at: Link.
      • Abstract

        Which is the tighter constraint on private sector investment: weak property rights or limited access to external finance? From a survey of new firms in post-communist countries, we find that weak property rights discourage firms from reinvesting their profits, even when bank loans are available. Where property rights are relatively strong, firms reinvest their profits; where they are relatively weak, entrepreneurs do not want to invest from retained earnings.

    • Knack, S. and Keefer, P. (1995) “Institutions And Economic Performance: Cross-Country Tests Using Alternative Institutional Measures,” Economics and Politics, 7(3), pp. 207–227.
      • Abstract

        The impact of property rights on economic growth is examined using indicators provided by country risk evaluators to potential foreign investors. Indicators include evaluations of contract enforceability and risk of expropriation. Using these variables, property rights are found to have a greater impact on investment and growth than has previously been found for proxies such as the Gastil indices of liberties, and frequencies of revolutions, coups and political assassinations. Rates of convergence to U.S.-level incomes increase notably when these property rights variables are included in growth regressions. These results are robust to the inclusion of measures of factor accumulation and of economic policy.

    • Kottek, M. et al. (2006) “World Map of the Köppen-Geiger climate classification updated,” Meteorologische Zeitschrift. Stuttgart, Germany: Schweizerbart Science Publishers, 15(3), pp. 259–263. doi: 10.1127/0941-2948/2006/0130.
    • Kremer, M. (1993) “Population Growth and Technological Change: One Million B.C. to 1990,” The Quarterly Journal of Economics, 108(3), pp. 681–716. Available at: Link.
      • Abstract

        The nonrivalry of technology, as modeled in the endogenous growth literature, implies that high population spurs technological change. This paper constructs and empirically tests a model of long-run world population growth combining this implication with the Malthusian assumption that technology limits population. The model predicts that over most of history, the growth rate of population will be proportional to its level. Empirical tests support this prediction and show that historically, among societies with no possibility for technological contact, those with larger initial populations have had faster technological change and population growth. Copyright 1993, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

    • La Porta, R., Lopez-de-Silanes, F. and Shleifer, A. (2008) “The Economic Consequences of Legal Origins,” Journal of Economic Literature. American Economic Association, 46(2), pp. pp. 285–332. Available at: Link.
      • Abstract

        In the last decade, economists have produced a considerable body of research suggesting that the historical origin of a country’s laws is highly correlated with a broad range of its legal rules and regulations, as well as with economic outcomes. We summarize this evidence and attempt a unified interpretation. We also address several objections to the empirical claim that legal origins matter. Finally, we assess the implications of this research for economic reform.

    • La Porta, R. et al. (1998) “Law and Finance,” Journal of Political Economy. The University of Chicago Press, 106(6), pp. pp. 1113–1155. Available at: Link.
      • Abstract

        This paper examines legal rules covering protection of corporate shareholders and creditors, the origin of these rules, and the quality of their enforcement in 49 countries. The results show that common-law countries generally have the strongest, and French civil-law countries the weakest legal protections of investors, with German and Scandanavian civil-law countries located in the middle. We also find that concentration of ownership of shares in the largest public companies is negatively related to investor protections, consistent with the hypothesis that small, diversified share-holders are unlikely to be important in countries that fail to protect their rights.

    • Lane, P. R. and Tornell, A. (1999) “The Voracity Effect,” American Economic Review, 89(1), pp. 22–46. Available at: Link.
      • Abstract

        The authors analyze an economy that lacks a strong legal-political institutional infrastructure and is populated by multiple powerful groups. Powerful groups dynamically interact via a fiscal process that effectively allows open access to the aggregate capital stock. In equilibrium, this leads to slow economic growth and a ’voracity effect,’ by which a shock, such as a terms of trade windfall, perversely generates a more-than-proportionate increase in fiscal redistribution and reduces growth. The authors also show that a dilution in the concentration of power leads to faster growth and a less procyclical response to shocks.

    • Lee, R. D. (1988) “Induced population growth and induced technological progress,” Mathematical Population Studies, 1(3), pp. 265–288. Available at: Link.
    • Litina, A. (2016) “Natural land productivity, cooperation and comparative development,” Journal of Economic Growth, 21(4), pp. 351–408. doi: 10.1007/s10887-016-9134-7.
      • Abstract

        Abstract This research advances the hypothesis that natural land productivity in the past, and its effect on the desirable level of cooperation in the agricultural sector, had a persistent effect on the evolution of social capital, the process of industrialization and comparative economic development across the globe. Exploiting exogenous sources of variations in land productivity across (a) countries; (b) individuals within a country, (c) migrants of different ancestry within a country, and (d) individuals residing in regions within a country, the research establishes that lower level of land productivity in the past is associated with more intense cooperation and higher levels of contemporary social capital and development.

    • Ma, D. (2013) “State capacity and great divergence, the case of Qing China (1644–1911),” Eurasian Geography and Economics. Routledge, 54(5-6), pp. 484–499. doi: 10.1080/15387216.2014.907530.
      • Abstract

        This article posits that the political institution of imperial China – its unitary and centralized ruling structure – is an essential determinant to China’s long-run economic trajectory and its early modern divergence from Western Europe. Drawing on institutional economics, I demonstrate that monopoly rule, a long time-horizon, and the large size of the empire could give rise to a path of low-taxation and dynastic stability in imperial China. But fundamental incentive misalignment and information asymmetry problems embedded within its centralized and hierarchical political structure also constrained the development of the fiscal and financial capacity of the Chinese state. This paper develops several sets of unique data series on warfare, central government revenue, and governmental savings (in the form of silver reserves) for seventeenth–nineteenth century Qing China, matched with an historical narrative to illustrate the problem of incentives and information as the origin of China’s economic divergence from Western Europe.

    • Masters, W. A. and McMillan, M. S. (2001) “Climate and Scale in Economic Growth,” Journal of Economic Growth, 6(3), pp. 167–186.
      • Abstract

        This paper introduces new data on climatic conditions to empirical tests of growth theories. We find that, since 1960, temperate countries have converged towards high levels of income while tropical nations have converged towards various income levels associated with economic scale and the extent of the market. These results hold for a wide range of tests. A plausible explanation is that temperate regions’ growth was assisted by their climate, perhaps historically for their transition out of agriculture into sectors whose productivity converges across countries, while tropical countries’ growth is relatively more dependent on gains from specialization and trade.

    • Mauro, P. (1995) “Corruption and Growth,” The Quarterly Journal of Economics, 110(3), pp. 681–712.
      • Abstract

        This paper analyzes a newly assembled data set consisting of subjective indices of corruption, the amount of red tape, the efficiency of the judicial system, and various categories of political stability for a cross section of countries. Corruption is found to lower investment, thereby lowering economic growth. The results are robust to controlling for endogeneity by using an index of ethnolinguistic fractionalization as an instrument.

    • Michalopoulos, S. (2012) “The Origins of Ethnolinguistic Diversity,” American Economic Review, 102(4), pp. 1508–39. Available at: Link.
      • Abstract

        This study explores the determinants of ethnolinguistic diversity within as well as across countries, shedding light on its geographic origins. The empirical analysis conducted across countries, virtual countries, and pairs of contiguous regions establishes that geographic variability, captured by variation in regional land quality and elevation, is a fundamental determinant of contemporary linguistic diversity. The findings are consistent with the proposed hypothesis that differences in land endowments gave rise to location-specific human capital, leading to the formation of localized ethnicities. (JEL J15, J24, Z13)

    • Michalopoulos, S. and Papaioannou, E. (2014) “National Institutions and Subnational Development in Africa,” Quarterly Journal of Economics, 129(1), pp. 151–213.
      • Abstract

        We investigate the role of national institutions on African regional development in a novel framework. We exploit the fact that the arbitrary political boundaries in the eve of African independence partitioned more than two hundred ethnic groups across different countries subjecting similar cultures, residing in homogeneous geographic areas, to different formal institutions. Using both a matching-type and a regression discontinuity approach we show that differences in countrywide institutional structures across the national border do not explain within-ethnicity differences in economic performance, as captured by satellite light density at night. Despite some evidence of heterogeneity, for the overwhelming majority of groups the relationship is economically and statistically insignificant. While our results do not necessarily generalize to areas far from the national borders, close to the capital cities or to other parts of the world, they suggest that the cross-country positive correlation between formal national institutions and economic development has to be carefully interpreted.

    • Michalopoulos, S. and Papaioannou, E. (2013) “Pre-colonial Ethnic Institutions and Contemporary African Development,” Econometrica, 81(1), pp. 113–152.
      • Abstract

        We investigate the role of deeply-rooted pre-colonial ethnic institutions in shaping com- parative regional development within African countries. We combine information on the spatial distribution of ethnicities before colonization with regional variation in contempo- rary economic performance, as proxied by satellite images of light density at night. We document a strong association between pre-colonial ethnic political centralization and re- gional development. This pattern is not driven by differences in local geographic features or by other observable ethnic-specific cultural and economic variables. The strong positive association between pre-colonial political complexity and contemporary development ob- tains also within pairs of adjacent ethnic homelands with different legacies of pre-colonial political institutions.

    • Michalopoulos, S. and Papaioannou, E. (2011) The Long-Run Effects of the Scramble for Africa. CEPR Discussion Papers 8676. C.E.P.R. Discussion Papers. Available at: Link.
      • Abstract

        We examine the long-run consequences of the scramble for Africa among European powers in the late 19th century and uncover the following empirical regularities. First, using information on the spatial distribution of African ethnicities before colonization, we show that borders were arbitrarily drawn. Apart from the land mass and water area of an ethnicity’s historical homeland, no other geographic, ecological, historical, and ethnic-specific traits predict which ethnic groups have been partitioned by the national border. Second, using data on the location of civil conflicts after independence, we show that partitioned ethnic groups have suffered significantly more warfare; moreover, partitioned ethnicities have experienced more prolonged and more devastating civil wars. Third, we identify sizeable spillovers; civil conflict spreads from the homeland of partitioned ethnicities to nearby ethnic regions. These results are robust to a rich set of controls at a fine level and the inclusion of country fixed effects and ethnic-family fixed effects. The uncovered evidence thus identifies a sizable causal impact of the scramble for Africa on warfare.

    • Michalopoulos, S., Putterman, L. and Weil, D. N. (2016) The Influence of Ancestral Lifeways on Individual Economic Outcomes in Sub-Saharan Africa. Working Paper 21907. National Bureau of Economic Research. doi: 10.3386/w21907.
      • Abstract

        We explore the role of an individual’s historical lineage in determining economic status, holding constant his or her current location. This is complementary to the more common approach to studying how history shapes economic outcomes across locations. Motivated by a large literature in social sciences stressing the beneficial influence of agricultural transition on contemporary economic performance at the level of countries, we examine the relative status of descendants of agriculturalists vs. pastoralists. We match individual-level survey data with information on the historical lifeways of ancestors, focusing on Africa, where the transition away from such modes of production began only recently. Within enumeration areas and occupational groups, we find that individuals from ethnicities that derived a larger share of subsistence from agriculture in the pre-colonial era are today more educated and wealthy. A tentative exploration of channels suggests that differences in attitudes and beliefs as well as differential treatment by others, including less political power, may contribute to these divergent outcomes.

    • Motamed, M. J., Florax, R. J. G. M. and Masters, W. A. (2014) “Agriculture, transportation and the timing of urbanization: Global analysis at the grid cell level,” Journal of Economic Growth. Springer US, 19(3), pp. 339–368. Available at: Link.
    • Naritomi, J., Soares, R. and Assuncao, J. J. (2012) “Institutional Development and Colonial Heritage within Brazil,” Journal of Economic History, 72(2), pp. 393–422.
      • Abstract

        This article analyzes the determinants of local institutions in Brazil. We show that institutional quality and distribution of land are partly inherited from the colonial histories experienced by different areas of the country. The sugar cane boom—characterized by an oligarchic society—is associated with more land inequality. The gold boom—characterized by a heavily inefficient presence of the Portuguese state—is associated with worse governance and access to justice. We do not find similar effects for a postcolonial boom (coffee). We also find that the colonial episodes are correlated with lower provision of public goods.

    • Nunn, N. (2009) “The Importance of History for Economic Development,” Annual Review of Economics, 1, pp. 65–92.
      • Abstract

        This article provides a survey of a growing body of empirical evidence that points toward the important long-term effects that historic events can have on economic development. The most re- cent studies, using microlevel data and more sophisticated identifi- cation techniques, have moved beyond testing whether history matters and attempt to identify exactly why history matters. The most commonly examined channels include institutions, culture, knowledge and technology, and movements between multiple equi- libria. The article concludes with a discussion of the questions that remain and the direction of current research in the literature.

    • Nunn, N. (2008) “The Long-Term Effects of Africa’s Slave Trades,” The Quarterly Journal of Economics. Oxford University Press, 123(1), pp. 139–176. Available at: Link.
      • Abstract

        Can part of Africa’s current underdevelopment be explained by its slave trades? To explore this question, I use data from shipping records and historical documents reporting slave ethnicities to construct estimates of the number of slaves exported from each country during Africa’s slave trades. I find a robust negative relationship between the number of slaves exported from a country and current economic performance. To better understand if the relationship is causal, I examine the historical evidence on selection into the slave trades and use instrumental variables. Together the evidence suggests that the slave trades had an adverse effect on economic development.

    • Nunn, N. and Puga, D. (2012) “Ruggedness: The Blessing of Bad Geography in Africa,” The Review of Economics and Statistics. The MIT Press, 94(1), pp. pp. 20–36. Available at: Link.
      • Abstract

        We show that geography, through its impact on history, can have important effects on economic development today. The analysis focuses on the historic interaction between ruggedness and Africa’s slave trades. Although rugged terrain hinders trade and most productive activities, negatively affecting income globally, rugged terrain within Africa afforded protection to those being raided during the slave trades. Since the slave trades retarded subsequent economic development, ruggedness within Africa has also had a historic indirect positive effect on income. Studying all countries worldwide, we estimate the differential effect of ruggedness on income for Africa. We show that the differential effect of ruggedness is statistically significant and economically meaningful, it is found in Africa only, it cannot be explained by other factors like Africa’s unique geographic environment, and it is fully accounted for by the history of the slave trades.

    • Nunn, N. and Qian, N. (2011) “The Potato’s Contribution to Population and Urbanization: Evidence from a Historical Experiment,” The Quarterly Journal of Economics. Oxford University Press, 126(2), pp. pp. 593–650. Available at: Link.
      • Abstract

        We exploit regional variation in suitability for cultivating potatoes, together with time variation arising from their introduction to the Old World from the Americas, to estimate the impact of potatoes on Old World population and urbanization. Our results show that the introduction of the potato was responsible for a significant portion of the increase in population and urbanization observed during the eighteenth and nineteenth centuries. According to our most conservative estimates, the introduction of the potato accounts for approximately one-quarter of the growth in Old World population and urbanization between 1700 and 1900. Additional evidence from within-country comparisons of city populations and adult heights also confirms the cross-country findings.

    • Nunn, N. and Wantchekon, L. (2011) “The Slave Trade and the Origins of Mistrust in Africa,” American Economic Review, 101(7), pp. 3221–52.
      • Abstract

        We show that current differences in trust levels within Africa can be traced back to the transatlantic and Indian Ocean slave trades. Combining contemporary individual-level survey data with historical data on slave shipments by ethnic group, we find that individuals whose ancestors were heavily raided during the slave trade are less trusting today. Evidence from a variety of identification strategies suggests that the relationship is causal. Examining causal mechanisms, we show that most of the impact of the slave trade is through factors that are internal to the individual, such as cultural norms, beliefs, and values.

    • Olson, M. (1996) “Distinguished Lecture on Economics in Government: Big Bills Left on the Sidewalk: Why Some Nations are Rich, and Others Poor,” The Journal of Economic Perspectives. American Economic Association, 10(2), pp. 3–24. Available at: Link.
      • Abstract

        Some research presumes that, when rational parties bargain, nothing is left on the table, so that social outcomes are efficient and leave countries on the frontiers of their aggregate production functions. A study of differences in per capita incomes across countries shows that this cannot be the case. Countries’ endowments of natural and human resources do not explain any significant part of the variation in incomes and the mobility of capital assures that it is impartially available to all countries. National differences in the quality of policies and institutions across countries mainly account for differences in per capita incomes.

    • Olsson, O. and Hibbs, D. J. (2005) “Biogeography and long-run economic development,” European Economic Review, 49(4), pp. 909–938. Available at: Link.
      • Abstract

        The transition from a hunter-gather economy to agricultural production, which made possible the endogenous technological progress that ultimately led to the industrial revolution, is one of the most important events in the thousands of years of humankind’s economic development. In this paper we present theory and evidence showing that exogenous geography and initial condition biogeography exerted decisive influence on the location and timing of transitions to sedentary agriculture, to complex social organization and, eventually, to modern industrial production. Evidence from a large cross-section of countries indicates that the effects of geographic and biogeographic endowments on contemporary levels of economic development are remarkably strong.

        (This abstract was borrowed from another version of this item.)

        </details></li> </ul> </div> </li>
      • Olsson, O. and Paik, C. (2015) Long-run Cultural Divergence: Evidence from the Neolithic Revolution. Link: University of Gothenburg.
        • Abstract

          This paper investigates the long-run infuence of the Neolithic Revolution on contemporary cultural norms and institutions as reflected in the dimension of collectivism-individualism. We outline an agricultural origins-model of cultural divergence where we claim that the advent of farming in a core region was characterized by collectivist values and eventually triggered the out-migration of individualistic farmers towards more and more peripheral areas. This migration pattern caused the initial cultural divergence, which remained persistent over generations. The key mechanism is demonstrated in an extended Malthusian growth model that explicitly models cultural dynamics and a migration choice for individualistic farmers. Using detailed data on the date of adoption of Neolithic agriculture among Western regions and countries, the empirical findings show that the regions which adopted agriculture early also value obedience more and feel less in control of their lives. They have also had very little experience of democracy during the last century. The findings add to the literature by suggesting the possibility of extremely long lasting norms and beliefs infuencing today’s socioeconomic outcomes.

      • Putterman, L. and Weil, D. N. (2010) “Post-1500 Population Flows and the Long-Run Determinants of Economic Growth and Inequality,” Quarterly Journal of Economics. MIT Press, 125(4), pp. 1627–1682.
        • Abstract

          We construct a matrix showing the share of the year 2000 population in every country that is descended from people in different source countries in the year 1500. Using the matrix to adjust indicators of early development so that they reflect the history of a population’s ancestors rather than the history of the place they live today greatly improves the ability of those indicators to predict current GDP. The variance of the early development history of a country’s inhabitants is a good predictor for current inequality, with ethnic groups originating in regions having longer histories of organized states tending to be at the upper end of a country’s income distribution.

      • Ramcharan, R. (2010) “Inequality and Redistribution: Evidence from US Counties and States, 1890-1930,” The Review of Economics and Statistics. MIT Press, 92(4), pp. 729–744.
        • Abstract

          Does economic inequality affect redistributive policy? This paper turns to U.S. county data on land inequality over the period 1890 to 1930 to help address this fundamental question in political economy. Redistributive policy was primarily decided at the local level during this period, making county-level data particularly informative. Examining within-state variation also reduces the potential impact of latent institutional and political variables. The paper also uses a variety of identification strategies, including historic variables as well as county weather and crop characteristics, as instruments for land inequality. The evidence consistently suggests that greater inequality is significantly associated with less redistribution. This negative relationship is especially large in heavily rural counties, where concentrated landownership implied that landed elites also controlled the majority of economic production.

      • Rappaport, J. and Sachs, J. D. (2003) “The United States as a Coastal Nation,” Journal of Economic Growth, 8(1), pp. 5–46. Available at: Link.
        • Abstract

          US economic activity is overwhelmingly concentrated at its ocean and Great Lakes coasts, reflecting a large contribution from coastal proximity to productivity and quality of life. Extensively controlling for correlated natural attributes and initial conditions decisively rejects that the coastal concentration of economic activity is spurious or just derives from historical forces long since dissipated. Measuring proximity based on coastal attributes that contribute to either productivity or quality of life, but not to both, suggests that the coastal concentration derives primarily from a productivity effect but also, increasingly, from a quality of life effect. Copyright 2003 by Kluwer Academic Publishers

      • Rauch, F. and Michaels, G. (2013) Resetting the Urban Network: 117-2012. Economics Series Working Papers 684. University of Oxford, Department of Economics. Available at: Link.
        • Abstract

          Do locational fundamentals such as coastlines and rivers determine town locations, or can historical events trap towns in unfavorable locations for centuries? We examine the effects on town locations of the collapse of the Western Roman Empire, which temporarily ended urbanization in Britain, but not in France. As urbanization recovered, medieval towns were more often found in Roman era town locations in France than in Britain, and this difference still persists today. The resetting of Britain’s urban network gave it better access to naturally navigable waterways when this was important, while many French towns remained without such access.

      • Robinson, J. A., Torvik, R. and Verdier, T. (2006) “Political Foundations of the Resource Curse,” Journal of Development Economics, 79(2), pp. 447–468. Available at: Link.
        • Abstract

          I modify the uniform-price auction rules in allowing the seller to ration bidders. This allows me to provide a strategic foundation for underpricing when the seller has an interest in ownership dispersion. Moreover, many of the so-called "collusive-seeming" equilibria disappear.

      • Rodrik, D., Subramanian, A. and Trebbi, F. (2004) “Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development,” Journal of Economic Growth. Springer Netherlands, 9(2), pp. 131–165. Available at: Link.
        • Abstract

          We estimate the respective contributions of institutions, geography, and trade in determining income levels around the world, using recently developed instrumental variables for institutions and trade. Our results indicate that the quality of institutions “trumps” everything else. Once institutions are controlled for, conventional measures of geography have at best weak direct effects on incomes, although they have a strong indirect effect by influencing the quality of institutions. Similarly, once institutions are controlled for, trade is almost always insignificant, and often enters the income equation with the “wrong” (i.e., negative) sign. We relate our results to recent literature, and where differences exist, trace their origins to choices on samples, specification, and instrumentation.

      • Sachs, J. D. (2003) Institutions Don’t Rule: Direct Effects of Geography on Per Capita Income. NBER Working Papers 9490. National Bureau of Economic Research, Inc. Available at: Link.
        • Abstract

          In a series of papers, my colleagues and I have demonstrated that levels of per capita income, economic growth, and other economic and demographic dimensions are strongly correlated with geographical and ecological variables such as climate zone, disease ecology, and distance from the coast. Three recent papers purport to show that the role of geography in explaining cross-country patterns of income per capita operates predominantly or exclusively through the choice of institutions, with little direct effect of geography on income after controlling for the quality institutions. This note shows that malaria transmission, which is strongly affected by ecological conditions, directly affects the level of per capita income after controlling for the quality of institutions.

      • Sokoloff, K. L. and Engerman, S. L. (2000) “History Lessons: Institutions, Factors Endowments, and Paths of Development in the New World,” The Journal of Economic Perspectives. American Economic Association, 14(3), pp. 217–232. Available at: Link.
        • Abstract

          The explanations offered for the contrasting records of long-run growth and development among the societies of North and South America most often focus on institutions. The traditional explanations for the sources of these differences in institutions, typically highlight the significance of national heritage or religion. We, in contrast, argue that a hemispheric perspective across the wide range of colonies established in the New World by the Europeans suggests that although there were many influences, factor endowments or initial conditions had profound and enduring effects on the long-run paths of institutional and economic development followed by the respective economies.

      • Spolaore, E. and Wacziarg, R. (2013) “How Deep Are the Roots of Economic Development?,” Journal of Economic Literature, 51(2), pp. 325–369. Available at: Link.
        • Abstract

          The empirical literature on economic growth and development has moved from the study of proximate determinants to the analysis of ever deeper, more fundamental factors, rooted in long-term history. A growing body of new empirical work focuses on the measurement and estimation of the effects of historical variables on contemporary income by explicitly taking into account the ancestral composition of current populations. The evidence suggests that economic development is affected by traits that have been transmitted across generations over the very long run. This article surveys this new literature and provides a framework to discuss different channels through which intergenerationally transmitted characteristics may impact economic development, biologically (via genetic or epigenetic transmission) and culturally (via behavioral or symbolic transmission). An important issue is whether historically transmitted traits have affected development through their direct impact on productivity, or have operated indirectly as barriers to the diffusion of productivityenhancing innovations across populations.

      • Spolaore, E. and Wacziarg, R. (2012) “Long-Term Barriers to the International Diffusion of Innovations,” NBER International Seminar on Macroeconomics, 8(1), pp. 11–46. Available at: Link.
      • Spolaore, E. and Wacziarg, R. (2009) “The Diffusion of Development,” Quarterly Journal of Economics. MIT Press, 124(2), pp. 469–529.
        • Abstract

          We find that genetic distance, a measure associated with the time elapsed since two populations’ last common ancestors, has a statistically and economically significant effect on income differences across countries, even controlling for measures of geographical distance, climatic differences, transportation costs, and measures of historical, religious, and linguistic distance. We provide an economic interpretation of these findings in terms of barriers to the diffusion of development from the world technological frontier, implying that income differences should be a function of relative genetic distance from the frontier. The empirical evidence strongly supports this barriers interpretation.

      • Strauss, J. (1986) “Does Better Nutrition Raise Farm Productivity?,” Journal of Political Economy, 94(2), pp. 297–320. Available at: Link.
        • Abstract

          No abstract is available for this item.

      • Strulik, H. (2008) “Geography, health, and the pace of demo-economic development,” Journal of Development Economics. Elsevier, 86(1), pp. 61–75.
        • Abstract

          This paper investigates the impact of subsistence consumption and extrinsic and intrinsic causes of child mortality on fertility and child expenditure. It offers a theory for why mankind multiplies at higher rates at geographically unfavorable, tropical locations. Placed into a macroeconomic framework this behavior creates an indirect channel through which geography shapes economic performance. It is explained why it are countries of low absolute latitude where we observe exceedingly slow (if not stalled) economic development and demographic transition.

      • Subramanian, S. and Deaton, A. (1996) “The Demand for Food and Calories,” Journal of Political Economy, 104(1), pp. 133–162. Available at: Link.
        • Abstract

          The authors investigate nutrition and expenditure in rural Maharashtra in India. They estimate that the elasticity of calorie consumption with respect to total expenditure is 0.3-0.5, a range that is in accord with conventional wisdom. The elasticity declines only slowly with levels of living and is far from the value of zero suggested by a recent revisionist literature. In these Indian data, the calories necessary for a day’s activity cost less than 5 percent of the daily wage, which makes it implausible that income is constrained by nutrition rather than the other way around. Copyright 1996 by University of Chicago Press.

      • Talhelm, T. et al. (2014) “Large-Scale Psychological Differences Within China Explained by Rice Versus Wheat Agriculture,” Science. American Association for the Advancement of Science, 344(6184), pp. 603–608. doi: 10.1126/science.1246850.
        • Abstract

          On a diverse and large set of cognitive tests, subjects in East Asian countries are more inclined to display collectivist choices, whereas subjects in the United States are more inclined to score as individualists. Talhelm et al. (p. 603; see the Perspective by Henrich) suggest that one historical source of influence was societal patterns of farming rice versus wheat, based on three cognitive measures of individualism and collectivism in 1000 subjects from rice- and wheat-growing regions in China. Cross-cultural psychologists have mostly contrasted East Asia with the West. However, this study shows that there are major psychological differences within China. We propose that a history of farming rice makes cultures more interdependent, whereas farming wheat makes cultures more independent, and these agricultural legacies continue to affect people in the modern world. We tested 1162 Han Chinese participants in six sites and found that rice-growing southern China is more interdependent and holistic-thinking than the wheat-growing north. To control for confounds like climate, we tested people from neighboring counties along the rice-wheat border and found differences that were just as large. We also find that modernization and pathogen prevalence theories do not fit the data.

      • Vollrath, D. (2013) “Inequality and school funding in the rural United States, 1890,” Explorations in Economic History, 50(2), pp. 267–284. Available at: Link.   Paper   Data
        • Abstract

          This paper examines the relationship of inequality to school funding in counties of the U.S. in 1890. Inequality, measured here on the basis of farm-size distributions, is found to be negatively related to local school property tax revenues across the whole sample of 1345 rural counties. However, further analysis shows that this relationship is not consistent across the sample. In the North, there is a significant negative relationship between inequality and school funding, and this relationship is shown to be consistent with the fact that assessed values of property did not rise linearly with wealth. Across the South, there is no distinct relationship between inequality and school funding. The results also indicate that inequality in the South cannot directly explain the gap in school funding with the North, in the sense that redistributing farms in the South to match the Northern distributions leads to no predicted increase in school funding.

      • Waldinger, M. (2015) The economic effects of long-term climate change: evidence from the little ice age. GRI Working Papers 214. Grantham Research Institute on Climate Change and the Environment. Available at: Link.
        • Abstract

          Recent studies have consistently found important economic effects of year-to-year weather fluctuations. This paper studies the economic effects of long-term and gradual climate change, over a period of 250 years, when people have time to adapt. In particular, I study the effects of the Little Ice Age, a historical episode of long-term climate change. Results show significant negative economic effects of long-term climate change. Cities with good access to trade were substantially less affected. Results from yearly historical wheat prices and yield ratios show that temperature change impacted economic growth through its effect on agricultural productivity. Further evidence shows a lack of adaptation. I show evidence of the relevance of these results to the context of contemporary developing countries and recommend ways in which these findings may improve Integrated Assessment Models.

      • Wen, Y. and Luo, J. (2015) Institutions Do Not Rule: Reassessing the Driving Forces of Economic Development. Working Papers 2015-1. Federal Reserve Bank of St. Louis. Available at: Link.
        • Abstract

          We use cross-country data and instrumental variables widely used in the literature to show that (i) institutions (such as property rights and the rule of law) do not explain industrialization and (ii) agrarian countries and industrial countries have entirely different determinants for income levels. In particular, geography, rather than institutions, explains the income differences among agrarian countries, while institutions appear to matter only for income variations in industrial economies. Moreover, we find it is the stage of economic development (or the absence/presence of industrialization) that explains a country’s quality of institutions rather than vice versa. The finding that institutions do not explain industrialization but are instead explained by industrialization lends support to the well-received view among prominent economic historians—that institutional changes in 17th and 18th century England did not cause the Industrial Revolution.

      • Wilde, J. (2013) How Substitutable are Fixed Factors in Production? Evidence from Pre-industrial England. Working Papers 0113. University of South Florida, Department of Economics. Available at: Link.
        • Abstract

          The extent to which fixed factors of production such as land constrain per-capita income growth has been a widely discussed topic in economics since at least Malthus (1798). Whether fixed factors limit growth depends crucially on two variables: the substitutability of fixed factors in production, and the extent to which innovation will be biased towards land-saving technologies. However, there are few estimates of either variable, and most models assume this elasticity of substitution is unity out of con- venience. This paper attempts to fill that gap in the literature. Using the timing of plague epidemics as an instrument for labor supply, this paper estimates the elasticity of substitution between fixed and non-fixed factors in pre-industrial England. I find that the elasticity of substitution between land and other factors during this period was signicantly less than one, which implies that the Malthusian effects of population on income were stronger than current models predict. In addition, I am able to esti- mate the direction and magnitude of induced innovation. I find evidence that denser populations – and hence higher land scarcity – induced innovation towards land-saving technologies. Specically, I find that a doubling of population density in England from its year 1500 level raises the difference in the growth rates of land- and labor-enhancing productivity by 0.22% per year.

      • Woodberry, R. D. (2012) “The Missionary Roots of Liberal Democracy,” American Political Science Review. Cambridge University Press, 106(2), pp. 244–274. doi: 10.1017/S0003055412000093.
      • Yoo, D. and Steckel, R. H. (2010) Property Rights and Financial Development: The Legacy of Japanese Colonial Institutions. NBER Working Papers 16551. National Bureau of Economic Research, Inc. Available at: Link.
        • Abstract

          Several studies link modern economic performance to institutions transplanted by European colonizers and here we extend this line of research to Asia. Japan imposed its system of well-defined property rights in land on some of its Asian colonies, including Korea, Taiwan and Palau. In 1939 Japan began to survey and register private land in its island colonies, an effort that was completed in Palau but interrupted elsewhere by World War II. Within Micronesia robust economic development followed only in Palau where individual property rights were well defined. Second, we show that well-defined property rights in Korea and Taiwan secured land taxation and enabled farmers to obtain bank loans for capital improvements, principally irrigation systems. Our analytical model predicts that high costs of creating an ownership updating system and a citizen identity system discourage a short-sighted government from implementing these crucial components, the absence of which gradually makes land registration obsolete. Third, considering all of Japan’s colonies, we use the presence or absence of a land survey as an instrument to identify the causal impact of new institutions. Our estimates show that property-defining institutions were important for economic development, results that are confirmed when using a similar approach with British Colonies in Asia.

      • Center for International Earth Science Information Network (CIESIN), Columbia University, International Food Policy Research Institute, The World Bank, and Centro Internacional de Agricultura Tropical (2011) “Global Rural-Urban Mapping Project, Version 1 (GRUMPv1): Population Density Grid.” Palisades, NY: NASA Socioeconomic Data and Applications Center (SEDAC). Available at: Link.
      • Food and Agriculture Organization (2012) Global Agro-ecological Zones. United Nations.
      • </ol>

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