Looking South: Engerman and Sokoloff:
What Has Happened in the New World?
- Four areas:
- U.S.-Canada
- Mexico-Brazil
- Caribbean + slave Brazil
- Southern cone
- U.S.-Canada very rich: rest not so. Why?
- $80K per worker per year in the U.S. $10K-$20K more common in Latin America..
- All have (or had) favorable land-labor ratios after conquest and plagues...
- All had abundant natural resources...
- All "began" with an abundance of land relative to labor...
- Southern cone keeping up with North America until the 1930s--I will not deal with that today...
- Two lines of explanation: problems of slavery and ex-slavery; problems of mainland Latin America
- The Puzzle: We Explain United States Growth as Markets + Resources = Accumulation + Technology
- But what happens when we go to Latin America?
- From the perspective of 1700, the United States is a marginal new-world economic area
- Yet Latin America today lags far behind the United States and Canada
- To explain U.S. vs. Latin America, you need "institutions"
- What are institutions?
- Where do institutions come from?
- Three Theories of Institutions:
- "Legal origins" (Shleifer et al.)
- "Tropical diseases and grab and run" (Acemoglu et al.)
- Engerman and Sokoloff
- A historians' story--which means, "it's complicated"
- Legal origins is broadly wrong--or at least overemphasized
- Grab-and-run due to tropical diseases also greatly overemphasized
- Factor endowments
- Indigenous population oppression
- Resource curse--slavery
- Slavery in the Connecticut River valley
- Slavery in New York City
- Key paragraph: "The British colonies in the New World evolve quite distinct societies and sets of institutions.... The majority that failed shared certain salient features with Latin America.... [These features] allowed for average standards of living that were high at that time... [but] less well suited for the realization of sustained economic growth..."
- "Non-white" a proxy for savage economic (and political!) inequality
- European migrant standards of living 2x or more those in Europe throughout the colonial period--$1000 of today's dollars per capita per year
- European standards of living 4x those in Europe in slave-staple-hacienda colonies--$2000 of today's dollars per capita per year
- Staple crops: sugar, coffee, rice, tobacco, cotton easily produced by slave labor in the Caribbean and Brazil. Haiti 3x as rich as United States in 1790?
- Extensive indigenous populations in Mexico and Peru
- Less than 20% of Mexican, Peruvian population "white" as of 1800
- Economic and political equality a very good thing
- Land policy
- Immigration policy
- (Mercantilist) trade policy
- Middle-class demand for manufactures: "American system"
- Timing of industrialization
- Education
- Other human capital: familiarity with technology or markets
Looking East: Alesina et al.:
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