Transcript Colonial legacy, factor endowments, and institutions

Colonial legacy, factor
endowments, and institutions
Political Economy of the Global South
Prof. Tyson Roberts
• Responses to readings and film
• What are some topics or questions you are
interested in for this class?
What are some ways that the colonial
experience can affect economic development
and other social outcomes in the Global South?
Some ways that the colonial experience can affect economic
development and other social outcomes in the Global South
• Extractive colonial institutions => extractive
post-colonial institutions
• Arbitrary borders & authority structures =>
legitimacy challenges in post-colonial states
• Slavery exports or imports => brutal
institutions, weak social capital, ethnic
cleavages
Reversal of Fortunes
• Until the 1800s, many tropical countries were
wealthier than temperate countries:
– North America was considered less valuable than
the Caribbean and Latin America.
– Caribbean island of Guadaloupe (563 square
miles) was considered equivalent in value to
Canada.
– In 1790, Haiti had the highest income per capita
(including slaves) in the world.
Log GDP/capita: USA vs Mexico
Source: Maddison
Log GDP/capita: China vs Canada
Source: Maddison
Log GDP/capita: Australia vs India
Source: Maddison
• Why this reversal in fortunes?
• One answer: Institutions
• Where do institutions comes from?
• One source: Colonial experience
based on a map by Wikimedia/Andrei nacu
based on a map by Wikimedia/Andrei nacu
Typologies of colonization
• By colonial power: French, British, German,
Belgian, Spanish, Japanese
– According to some, former British colonies have
better outcomes because British colonization
created superior institutions
– Evidence is weak/mixed
Typologies of colonization
• By colonial power: French, British, German,
Belgian, Spanish, Japanese
• Settler vs. non-settler
• Direct vs. indirect
• Land lord vs. non-landlord
• Predatory vs. developmentalist
• Hegemonic vs. non-hegemonic
Sokoloff & Engerman
• Settler colonies
– Often in temperate climates with (relatively) small
indigenous populations and available land
– Large colonial populations
– Colonial family farms
– Food crops for local consumption (export surplus)
– Social equality, for the most part, among colonists
– Relatively low levels of income inequality
• Settler colonies
– Temperate climate with relatively small indigenous
population => Credible exit option
– Food crops for local consumption => Dependent state
=> Widespread franchise, education, protection of
property rights
Economic opportunities, investment, public
goods, social safety net
 Industrialization, economic growth,
low inequality among settlers
• Examples of Settler colonies
– US (especially northern colonies)
– Canada
– Australia
– New Zealand
– South Africa
– Argentina
– Singapore
– Israel
Typologies of colonization
• Non-settler colonies
– Often in tropics w/ large indigenous population
and/or soil suited for plantation crops such as sugar
=> import of African labor for cultivation
– Small colonial population relative to indigenous or
slave population
– Plantations, mines, or payment of tribute
– Often crops & minerals for export
– Social inequality between colonists & indigenous
and/or slave populations
– High levels of income inequality
Applying the EVL game…
• Non-settler colonies
– Population density; lack of education & property for the
masses=> No credible exit option for the masses in
agricultural economies
– Minerals for export => Autonomous state in extractive
economies
=> Targeted franchise/ education/ protection of
property rights
Protection of status quo against redistribution,
low investment, repressive state
 Low industrialization, low growth, high
inequality
• Examples of nonsettler colonies
– Sub-Saharan Africa, excluding Southern Africa
– Most of Latin America & Caribbean
– South Asia (India, etc.)
– Much of Southeast Asia
– Much of the Middle East
– (Southern states in US)
Typologies of colonization
• Non-settler colonies
– Direct rule (e.g., British in Africa) and non-landlord
revenue collection systems (e.g., Bombay
presidency)
– Indirect rule (e.g., French in Africa) & landlord
revenue collection systems (e.g., Bengal
presidency)
What is the relationship between resource
endowments, colonization and prosperity in
independent Africa?
Acemoglu, Johnson, and Robinson
• High settler mortality => few settlers =>
extractive colonial institutions => poor
institutional quality post-independence
• Low settler mortality => more settlers =>
European-style institutions => good
institutional quality post-independence
AJR present cross-national data that supports their
argument
• Direct rule & non-landlord revenue collection
systems
– Colonial administration collects taxes directly from
farmers
– Low inequality among local population (everyone
repressed)
• Indirect rule & landlord revenue collection
systems
– Colonial administration delegates tax collection to
local elites. Non-hegemonic rule.
– Increased inequality among local population
Protect status quo, low investment,
repressive state
 Low industrialization, low growth,
high inequality
– Examples: Zambia, landlord India, (Mexico), etc.
Determinants of institutions
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Colonial power (often exaggerated)
Factor endowments
Settler mortality rates (from tropical disease)
Other geographic factors, such as distance
Economic structure (inequality, etc.)
Pre-colonial history contrast with colonial
state
• Slave trade
What two types of legitimacy does
Englebert use in his study?
Horizontal & Vertical Legitimacy
• Horizontal legitimacy
– Consensus about "the definition of the
community over which rule is to be exercised."
– Agreement over borders of states
• Vertical legitimacy
– Agreement over "the principle(s) upon which the
'right to rule’ is based."
– No mismatch between colonial and precolonial
states
African states with vertical legitimacy
• Never colonized: Ethiopia
• No human settlement prior to colonization:
Islands such as Mauritius and Cape Verde
• Colonial states with similar arrangement to
precolonial system: Botswana, Lesotho,
Swaziland, Rwanda, Burundi
Horizontal Legitimacy
• Percentage of population which belongs to an ethnic group
that was NOT split between at least two countries.
Somalis were divided among five different states
Many large ethnic groups were split by the
colonial state borders of Congo-Zaire
Tuaregs in North Africa were split into
four different states
The challenge for illegitimate states
(p. 11)
• “From colonialism, they inherited the
instruments of statehood but not the power that
came with it in colonial days.”
• “contestations of policies by social groups,
opposition parties, or interest groups tend to turn
into challenges to the state itself …. Military
takeovers, disputes about recruitment patterns in
the administration or armed forces to armed
rebellions, and arguments on the allocation of
national resources to secession and irredenta
attempts.”
What is the relationship between the slave trade
and prosperity in independent Africa?
• Perhaps the slave trade targeted areas with
weak African states?
Slave trade
Weak precolonial state
Weak postcolonial state
A large share of slaves came from the
west coast of Africa
Many of the strongest precolonial
states were in West Africa
Most slaves were taken from densely populated areas;
Population density is generally associated with
economic development
Source: Nunn 2008
What is the relationship between the slave trade
and prosperity in independent Africa?
• Perhaps the slave trade targeted areas with
weak African states?
What is the relationship between the slave trade
and prosperity in independent Africa?
Nunn:
1. Raids and continuous warfare, with
associated demographic depletion, resulted
in weakened and underdeveloped political
structures
2. Slave trade led to intercommunal conflict,
preventing formation of large ethnic groups
and increasing fractionalization
Countries in areas that had intensive slave exports (in years
1400-1900) had weaker precolonial states in the 1800s
Countries that inherited weak states due to high slave exports
failed to develop; countries that inherited relatively stronger
states due to low slave exports have been more successful
Countries in areas that had intensive slave exports tend
to have higher ethnic fractionalization
Many countries with low income levels
have high ethnolinguistic fractionalization
Why do (sometimes arbitrary)
institutions endure?
Why do (sometimes arbitrary)
institutions endure?
• Some reasons:
– Transaction costs
– Vested interests
– Focal point
Some symptoms of low development
• “Bad” policies
• Poor institutions
• Low investment in education, health care,
infrastructure
Income level & institutions
Poor institutions,
bad policy
Low economic
development
Strong institutions or
good policy
High economic
development
A solution: identify exogenous or
“first” causes
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Colonial experience
Natural resource endowments
Geography
Ethnic cleavages
For example,
Ethnolinguistic fractionalization
Weak institutions
Low economic development
Some former colonies do better than
others
• Korea had high population density, and yet
Japanese colonizers were “developmental”
and not purely extractive
• Why?
• Stationary vs. roving bandits (Olson)
– Stationary bandits invest in infrastructure,
bureaucracy, etc. to grow the economy and tax
that growth over time
– Roving bandits extract heavily in the short-term
– Korea’s proximity to Japan facilitated a “stationary
bandit” approach whereas the distance of Latin
America & Africa from Europe may have
encouraged a “roving bandit” strategy
Short-term vs. long-term growth
• Colonial history is not destiny
– India had extractive colonizers but is now
technologically successful
– Independent China went from economic disaster to
powerhouse
– Argentina was a settler colony but has lost ground to
former extractive colony Brazil
– Chad & Ghana found oil after independence
– Haiti & Dominican Republic have same geography &
similar colonial experience (200 years ago), yet
different outcomes
The Haitian-Dominican Border
• Colonial history is not destiny
– All of Korea (N & S) was colonized by the Japanese
– The Japanese shifted the manufacturing base
from the South to the North
– But…
Conclusions
• Colonial history has an important effect on
post-colonial state institutions
• Institutions tend to endure or affect the
development of new institutions
• Institutions affect social interactions, including
politics and economic transactions, thereby
affecting social outcomes such as economic
development, political rights, and civil liberties
Other good readings on origins and
effects of colonial institutions
• “The Colonial Origins of Comparative
Development: An Empirical Investigation.”
Author(s): Daron Acemoglu, Simon Johnson,
James A. Robinson Source: The American
Economic Review, Vol. 91, No. 5 (Dec., 2001)
• “Reversal of Fortune: Geography and Institutions
in the Making of the Modern World Income
Distribution.” Authors: Daron Acemoglu, Simon
Johnson, James A. Robinson. Source: The
Quarterly Journal of Economics, November 2002