Working Paper: NBER ID: w12546
Authors: James Feyrer; Bruce Sacerdote
Abstract: Using a new database of islands throughout the Atlantic, Pacific and Indian Oceans we examine whether colonial origins affect modern economic outcomes. We argue that the nature of discovery and colonization of islands provides random variation in the length and type of colonial experience. We instrument for length of colonization using wind direction and wind speed. Wind patterns which mattered a great deal during the age of sail do not have a direct effect on GDP today, but do affect GDP via their historical impact on colonization. The number of years spent as a European colony is strongly positively related to the island's GDP per capita and negatively related to infant mortality. This basic relationship is also found to hold for a standard dataset of developing countries. We test whether this link is directly related to democratic institutions, trade, and the identity of the colonizing nation. While there is substantial variation in the history of democratic institutions across the islands, such variation does not predict income. Islands with significant export products during the colonial period are wealthier today, but this does not diminish the importance of colonial tenure. The timing of the colonial experience seems to matter. Time spent as a colony after 1700 is more beneficial to modern income than years before 1700, consistent with a change in the nature of colonial relationships over time.
Keywords: No keywords provided
JEL Codes: E21; O11; O4; O40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Colonial history (F54) | Modern GDP per capita (O49) |
| Colonial history (F54) | Infant mortality rates (J13) |
| Years spent as a colony after 1700 (F54) | Modern income (D31) |
| Years spent as a colony before 1700 (N51) | Modern income (D31) |
| Colonial experience (F54) | Modern economic outcomes (P17) |
| Colonial experience mediated by democratic institutions, trade, and identity of colonizers (F54) | Modern economic outcomes (P17) |
| Intensive agricultural exports during colonization (N56) | Modern wealth (D31) |
| Identity of the colonizer (F54) | Modern economic outcomes (P17) |