Imperialism, colonialism, and global development

Question 1

Which role did Britains slave trade play in the industrial revolution?

Answer 1

Williams hyphotesis: Slave trade caused the industrial revolution - without it, Britain would not have industrialized

Why?
- Slave trade gave profits
- Slave trade created an Atlantic economy with a greater market for british goods –> more incentives to industrialize

Question 2

What is the empirical evidence on the role of slave trade for the industrial revolution?

Answer 2

Williams argument: Britain got around 30% of their BNP of the time from slave trade

Empirical evidence: Far from 30% –> maybe more around 10%

Question 3

What is the correlation between slave trade and city growth?

Answer 3

Did the cities involved in slave trade do better? → YES

Cities involved in slave trade grows faster than other cities → size is correlated with economic growth

Citites in the UK who were involved in slave trade developed faster

Question 4

How can different endowments explain the different pathways of development in the New World?

Answer 4

Different pathways:
- Northern colonies (US, Canada, Australia) grew at a much higher rate than Southern American colonies. WHY?

Argument from Engerman/Sokoloff (endowments)
- Endowments → production structures → inequality → political institutions → outcome: growth, democrazy etc.

Question 5

How did Acemoglu and Robinson examine the relationship between institutions and growth?

Answer 5

By using a instrumental variable of “settler mortality” to exclude the exogenous variation in institutions.

Where settler mortality was high colonists set up minimal extractionist institutions, but where settler mortality was low, they settled and set up more european like institutions with property rights etc.

Results: Significant positive correlation between institutions and GDP

Question 6

Name some of the negative effects of European rule on colonized countries

Answer 6

X: Randomly drawn African borders –> Y: Ethnic conflicts today
- Homelands that were randomly decided by the European rulers have a 30% higher risk of political violence today.

X: Slave trade –> Y: Mistrust in Africa today
- Individuals whose ancestors were affected by slave trade are less trusting today

Question 7

Could you name some positive effects of slave trade/imperialism?

Answer 7

European missionary activity –> better human capital (people learning to read and write)

Market integration
- The British empires did what any economic handbook in growth would suggest –> integrating markets, promoting free trade, labor mobility, property rights etc.
- The colonialists exported huge amounts of their growth to the colonized states