1. Colonial legacy, factor endowments, and institutions
Political Economy of the Global South
Prof. Tyson Roberts

2. Responses to readings and film
What are some topics or questions you are interested in for this class?

3. What are some ways that the colonial experience can affect economic development and other social outcomes in the Global South?

4. 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

5. 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.

6. Log GDP/capita: USA vs Mexico
Source: Maddison

7. Log GDP/capita: China vs Canada
Source: Maddison

8. Log GDP/capita: Australia vs India
Source: Maddison

9. Why this reversal in fortunes?
One answer: Institutions
Where do institutions comes from?
One source: Colonial experience

10. based on a map by Wikimedia/Andrei nacu

11. based on a map by Wikimedia/Andrei nacu

12. 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

13. 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

14. 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
Even when social equality was not present at the beginning, their was an expectation of social equality that was successfully realized. For example, in Australia, convict settlers demanded rights that they had in England, such as trial by jury, etc.

15. 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

16.
When governance under the Articles of Confederation wheezed and wobbled, the states met in 1787 to draft a constitution giving a fresh start to the American experiment in self-rule, one that created a “republican form of government.” That meeting in Philadelphia has been one of the favored subjects of history painters.

17. Examples of Settler colonies
US (especially northern colonies)
Canada
Australia
New Zealand
South Africa
Argentina
Singapore
Israel

18. 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

19. 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

20. Slave revolt in Haiti

21. 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)

22. 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)

23. Acemoglu, Johnson, and Robinson
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

24. AJR present cross-national data that supports their argument

25. Direct rule & non-landlord revenue collection systems
Colonial administration collects taxes directly from farmers
Low inequality among local population (everyone repressed)

26. 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.

27. Determinants of institutions
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

28. What two types of legitimacy does Englebert use in his study?

29. 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

30. 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

31. Horizontal Legitimacy
Percentage of population which belongs to an ethnic group that was NOT split between at least two countries.

32. Somalis were divided among five different states

33. Many large ethnic groups were split by the colonial state borders of Congo-Zaire

34. Tuaregs in North Africa were split into four different states

36. 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.”
Definition of IRREDENTA
: a territory historically or ethnically related to one political unit but under the political control of another

37. 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

38. A large share of slaves came from the west coast of Africa

39. Many of the strongest precolonial states were in West Africa

40. Most slaves were taken from densely populated areas; Population density is generally associated with economic development
Source: Nunn 2008

41. What is the relationship between the slave trade and prosperity in independent Africa?
Perhaps the slave trade targeted areas with weak African states?

42. What is the relationship between the slave trade and prosperity in independent Africa?
Nunn:
Raids and continuous warfare, with associated demographic depletion, resulted in weakened and underdeveloped political structures
Slave trade led to intercommunal conflict, preventing formation of large ethnic groups and increasing fractionalization

43. Countries in areas that had intensive slave exports (in years ) had weaker precolonial states in the 1800s

44. 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

45. Countries in areas that had intensive slave exports tend to have higher ethnic fractionalization

46. Many countries with low income levels have high ethnolinguistic fractionalization

47. Why do (sometimes arbitrary) institutions endure?

48. Why do (sometimes arbitrary) institutions endure?
Some reasons:
Transaction costs
Vested interests
Focal point

49. Some symptoms of low development
“Bad” policies
Poor institutions
Low investment in education, health care, infrastructure

50. Income level & institutions

52. Poor institutions,
bad policy
Low economic development

53. Strong institutions or
good policy
High economic
development

54. A solution: identify exogenous or “first” causes
Colonial experience
Natural resource endowments
Geography
Ethnic cleavages

55. For example, Ethnolinguistic fractionalization Weak institutions
Low economic development

56. Some former colonies do better than others
Korea had high population density, and yet Japanese colonizers were “developmental” and not purely extractive
Why?

57. 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

58. 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

59. The Haitian-Dominican Border

60. 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…

62. 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

63. 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