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The World Bank

By Miriam Bruhn, Francisco A. Gallego, Catolica Chile, Hoyt Bleakley, Romulo Chumacero, Nicolas Depetris Chauvin and Irineu De Carvalho Filho


Levels of economic development vary widely within countries in the Americas. We argue that part of this variation has its roots in the colonial era. Colonizers engaged in di erent economic activities in di erent regions of a country, depending on local conditions. Some activities, such as mining and sugar cultivation, were "bad " in the sense that they depended heavily on the exploitation of labor and led to a low development path, while "good " activities that did not rely on the exploitation of labor led to a high development path. We show that regions with bad colonial activities have lower output per capita today than regions with good and regions with no colonial activities. Moreover, we examine levels of economic development before and after colonization and nd evidence that colonization reversed the economic fortunes of regions within a country. Our results also suggest that di erences in political representation (but not di erences in income inequality or human capital) could be the intermediating factor between colonial activities and current development

Year: 2006
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