The economic effects of geography Colombia as a case study

Abstract

This paper quantifies the economic impact of geography features using Colombian data at the municipal level. We use the proportion of slave population in 1835 as an instrument of current institutions. We find that, controlling for institutional quality, geographical characteristics, such as the percentage of flat terrain or the proximity to the marketplace, are statistically-significant determinants of income per capita and have large economic effects. The estimates are also consistent with sizable economics of scale and agglomeration. We discuss how the results contribute to the economic literature.Geography