What is the conclusion of “the colonial origins of comparative development” theory?

Die Kolonialursprünge der vergleichenden Entwicklungsforschung: eine skeptische Anmerkung
[journal article]

Abstract

"This note casts skepticism over various hypothesis formulated by Acemoglu, Johnson, and Robinson (2001) in reaching the conclusion that institutions cause economic development. The author has identified four major issues in the study. It lacks adequate econometric specification and relies only on, ... view more

"This note casts skepticism over various hypothesis formulated by Acemoglu, Johnson, and Robinson (2001) in reaching the conclusion that institutions cause economic development. The author has identified four major issues in the study. It lacks adequate econometric specification and relies only on, what the author termed, destiny variables. Secondly, the historical record does not support the author's theory that mortality rate determine Europeans strategy for institutions they intended to develop in the host country; thirdly, given current living standards and disease ridden environment in low and middle income countries, the claim that disease environment of early 19th century was neutral to economic development seems farfetched; finally, assuming that initial institutions caused present institutions put in question the developmental efforts of past half century and thus is more than a sweeping generalization." (author's abstract)... view less

Keywords
economic development (on national level); economic history; institutional factors; theory; Europe; standard of living; nineteenth century; econometrics; Great Britain; United States of America; protectionism; democracy; suffrage; illness; determinants; mortality; Africa; Asia; developing country; comparative research; North America

Classification
National Economy
General History
Sociology of Developing Countries, Developmental Sociology

Method
empirical; quantitative empirical; historical

Document language
English

Publication Year
2012

Page/Pages
p. 362-370

Journal
Historical Social Research, 37 (2012) 2

DOI
//doi.org/10.12759/hsr.37.2012.2.362-370

ISSN
0172-6404

Status
Published Version; peer reviewed

Licence
Creative Commons - Attribution 4.0

Abstract

Acemoglu, Johnson, and Robinson's (2001) seminal article argues property-rights institutions powerfully affect national income, using estimated mortality rates of early European settlers to instrument capital expropriation risk. However, 36 of the 64 countries in the sample are assigned mortality rates from other countries, often based on mistaken or conflicting evidence. Also, incomparable mortality rates from populations of laborers, bishops, and soldiers—often on campaign—are combined in a manner that favors the hypothesis. When these data issues are controlled for, the relationship between mortality and expropriation risk lacks robustness, and instrumental-variable estimates become unreliable, often with infinite confidence intervals. (JEL D02, E23, F54, I12, N40, O43, P14)

Citation

Albouy, David Y. 2012. "The Colonial Origins of Comparative Development: An Empirical Investigation: Comment." American Economic Review, 102 (6): 3059-76. DOI: 10.1257/aer.102.6.3059

Additional Materials

  • Data Set (11.75 KB)

JEL Classification

  • D02 Institutions: Design, Formation, and Operations
  • E23 Macroeconomics: Production
  • F54 Colonialism; Imperialism; Postcolonialism
  • I12 Health Production
  • N40 Economic History: Government, War, Law, International Relations, and Regulation: General, International, or Comparative
  • O43 Institutions and Growth
  • P14 Capitalist Systems: Property Rights
  • Simon Johnson
  • James A. Robinson
  • American Economic Review
  • vol. 91, no. 5, December 2001
  • (pp. 1369-1401)
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  • Article Information

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.

Citation

Acemoglu, Daron, Simon Johnson, and James A. Robinson. 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation." American Economic Review, 91 (5): 1369-1401. DOI: 10.1257/aer.91.5.1369

JEL Classification

  • O11 Macroeconomic Analyses of Economic Development
  • P51 Comparative Analysis of Economic Systems
  • I12 Health Production
  • N10 Economic History: Macroeconomics and Monetary Economics; Growth and Fluctuations: General, International, or Comparative
  • O57 Comparative Studies of Countries

What is meant by comparative development?

An index measuring national socioeconomic development, based on combining measures of education, health, and adjusted real income per capita.

What was the main cause for the reversal of fortune of many countries?

2 The main reason for the institutional reversal is that relatively poor regions were sparsely populated, and this enabled or induced Europeans to settle in large numbers and develop institutions encouraging investment.

What is Fortune economic reversal?

Acemoglu, Johnson, & Robinson (2002) have claimed that the world income distribution underwent a "Reversal of Fortune" from 1500 to the present, whereby formerly rich countries in what is now the developing world became poor while poor ones grew rich.

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