History and long-run growth

Question 1

What are the mechanisms through which history can impact long-run growth?

Answer 1

• institutions
• human capital
• geography
• culture
• genes

Question 2

Who are the key authors regarding the historical role of institutions?

Answer 2

• La Porta et al.
• Engerman and Sokoloff
• Acemoglu, Johnson and Robinson

Question 3

What is La Porta et al. about?

Answer 3

One of the first papers to use a historical variable as an instrument.

Investigated the impact of investor protection on equity markets, using legal origin as an instrument, citing differences in Roman and British law; with British law having higher investor protection
- likely violated the exclusion restriction, because legal origin impacts other things that impact equity markets

Question 4

What is Engerman and Sokoloff about?

Answer 4

Initial factor endowments > level of equality > quality of institutions > development

Eg.

1. Canada/US: soil, climate better for smallholding, less dense native population, less economies of scale
2. Less inequality as certain individuals can’t race ahead
3. More inclusive institutions, such as land policy (90% of household heads owned their land in Canada in 1901, compared to 2.4% in Mexico in 1910), or IP protection, which persist over time
4. More long-run growth, due to:
   - – larger middle class to demand manufactured goods
   - – more demand for intermediate goods
   - – legal framework
   - – patents for innovation

Question 5

What is AJR about?

Answer 5

Impact of institutional quality on development, using settler mortality as an instrument.

Argued that it’s a good instrument because:

• correlated with institutional quality
• only impacts development through institutional quality
• cannot be caused by development

Question 6

What’s the evidence regarding the historical role of human capital on long-run development?

Answer 6

Glaeser et al.

• institutional measures in traditional institutions papers are flawed, as they aren’t persistent and represent policies rather
• preferred measures aren’t correlated with growth
• settler mortality could also be an instrument for human capital: more significant if you test it

Caicedo

• closer to a Jesuit mission > more HC > higher income
• location of original Jesuit missions not correlated with human capital, so no endogeneity

Question 7

What’s the evidence regarding the historical role of geography on long-run development?

Answer 7

Sachs
- many papers on climate, disease, eg. being in an area with lost of malaria > underdevelopment

Diamond

• East-West orientation, so no massive climate changes
• Animals and plants suitable for domestication

Question 8

What’s the evidence regarding the historical role of culture on long-run development?

Answer 8

Tricky to partial out culture from institutions

Weber - protestant work ethic
Nunn and Wantchekon - slavery > less trusting culture

Question 9

What’s the evidence regarding the historical role of genes on long-run development?

Answer 9

Ashraf and Galor

- too much or too little genetic diversity is harmful