Colonial Theories of Institutional Development: Toward a Model of Styles of Imperialism

152 Pages·2017·2.419 MB·English

by  Daniel Oto-Peralías, Diego Romero-Ávila (auth.)

Contributions to Economics
Daniel Oto-Peralías
Diego Romero-Ávila
Colonial Theories
of Institutional
Development
Toward a Model of Styles of Imperialism
Contributions to Economics
More information about this series at http://www.springer.com/series/1262
´
Daniel Oto-Peral´ıas • Diego Romero-Avila
Colonial Theories of
Institutional Development
Toward a Model of Styles of Imperialism
DanielOto-Peral´ıas DiegoRomero-A´vila
SchoolofManagement DepartmentofEconomics,Quantitative
UniversityofSt.Andrews MethodsandEconomicHistory
St.Andrews,UnitedKingdom PablodeOlavideUniversity
Seville,Spain
ISSN1431-1933 ISSN2197-7178 (electronic)
ContributionstoEconomics
ISBN978-3-319-54126-6 ISBN978-3-319-54127-3 (eBook)
DOI10.1007/978-3-319-54127-3
LibraryofCongressControlNumber:2017936137
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Preface
DiegoRomero-A´vilawouldliketodedicatethisbooktothememoryofhisfather,
Pedro Jose´ Romero de A´vila Aguilar, for encouragement and support throughout
his career. The authors are particularly indebted to Luis A´ngeles, Jesu´s Crespo-
Cuaresma,Joaqu´ınMaudos,CarlosUsabiaga,andSimonWren-Lewisforvaluable
commentsandsuggestions.WealsothankseminarparticipantsatPablodeOlavide
University, St. Andrews University, and Vienna University of Economics and
Businessforvaluablecommentsandsuggestions.Theauthorsacknowledgefinan-
cial support from the Spanish Ministry of Science and Technology (grant
ECO2009-13357), the Spanish Ministry of Economics and Competitiveness
(grant ECO2012-35430), and the Andalusian Council of Innovation and Science
(ExcellenceProjectSEJ-4546).
St.Andrews,UK DanielOto-Peral´ıas
Sevilla,Spain DiegoRomero-A´vila
v
About This Book
Thisstudyanalyzestheroleplayedbyinitialendowmentsandcolonizeridentityinthe
explanationofinstitutionaldevelopmentinformercolonies.Afterabriefreviewofthe
literature,amodeloftwostylesofimperialismispresentedthatintegratesthecolonial
originandendowmentviewsexplainingcurrentinstitutions.WearguethatBritainand
Portugaladoptedan“economicallyoriented”style,whichwaspragmaticandsensitive
toinitialconditions.Forthisstyleofimperialism,theendowmentviewisapplicable,
becauseinterritorieswithlargeendowmentsEuropeanpowersestablishedextractive
institutions,withnegativeconsequencesforsubsequentinstitutionaldevelopment.In
contrast, France followed a “politically oriented” style of imperialism, in which
ideologicalandpoliticalmotivationsweremorepresent.Thisledtoauniformcolonial
policy largely independent of initial endowments. The Spanish case is a hybrid
between both models. Formally Spain implanted the same institutions across the
NewWorldcolonies,butinpractice,duetothelimitedresourcesofthemetropolis,
the intensityofcolonial penetrationvarieddepending onthe possibilitiestoextract
rents. Our empirical analysis finds remarkable heterogeneity in the relationship of
endowmentsandcolonizeridentitywithcurrentinstitutions.Thisresultcanbereadin
twoways:theimpactofcolonizeridentityvarieswiththelevelofendowments,and
therelationshipbetweenendowmentsandinstitutionsisverydifferentacrossformer
colonialpowers.Acoupleofimportantconsequencescanbederivedfromthisfinding.
First,theendowmentviewisnotuniversallyapplicable.Negativeeffectsofendow-
ments on institutions are only observed for former British colonies and to a lower
extentforSpanishandPortuguesecoloniesbutnotfortherest.Second,formerBritish
coloniesarenotalwaysassociatedwithbetterinstitutionssinceformerFrenchcolo-
niesatleastequaltheBritishwhenthelevelofendowmentsissufficientlyhigh.The
formofcolonialruleappears to mediate between colonies’ initialendowmentsand
theirinteractionwithmetropolis’domesticconditionsandcurrentinstitutionallevels.
vii
Contents
1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 OntheImportanceofInstitutions. . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 DeterminantsofInstitutionalQuality:TheKeyRole
ofEuropeanColonialism. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.3 TowardaModelofStylesofImperialism. . . . . . . . . . . . . . . . . . 6
1.4 PreliminaryEmpiricalEvidence. . . . . . . . . . . . . . . . . . . . . . . . . 7
1.5 StructureoftheStudy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2 ViewsLinkingColonialismwithInstitutions. . . . .. . . . . . .. . . . . .. 13
2.1 TheColonialOriginView. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.2 TheEndowmentView. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.3 TheEclecticView. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.4 OtherRelatedLiterature. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.4.1 AdditionalStudiesonColonialism. . . . . . . . . . . . . . . . . . 19
2.4.2 StudiesabouttheImportanceofPrecolonial
Institutions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.4.3 OtherWorkontheHistoricalRootsofComparative
Development.. . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 23
3 AModelofTwoStylesofImperialism. . . . . . . . . . . . . . . . . . . . . . . 27
3.1 TheTheoreticalFramework. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.2 AnApplicationtoEuropeanColonialEmpires. . . . . . . . . . . . . . . 31
3.2.1 TheBritishEmpire. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.2.2 TheFrenchEmpire. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.2.3 TheSpanishEmpire. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.2.4 ThePortugueseEmpire. . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.2.5 TheRemainderEmpires. . . . . . . . . . . . . . . . . . . . . . . . . 37
3.3 SomeGeneralObservationsBetweenDomesticConditions
andtheStyleofImperialism. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ix
x Contents
4 EmpiricalMethodologyandBaselineRegressionResults. . . . . . . . . 41
4.1 EmpiricalStrategyandDataDescription. . . . . . . . . . . . . . . . . . . 42
4.1.1 AlternativeEndowmentVariables. . . . . . . . . . . . . . . . . . 45
4.2 InitialResults:AdditiveModelVersusInteractionModel. . . . . . . 48
5 SensitivitytoAlternativeTheories. . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.1 TimingandDurationofColonization. . . . . . . . . . . . . . . . . . . . . 54
5.2 SociologicalandAnthropologicalFactors. . . . . . . . . . . . . . . . . . 57
5.3 GeographicandClimaticFactors. . . . .. . . . . .. . . . . . .. . . . . .. 62
6 FurtherSensitivityAnalyses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
6.1 RobustnesstoSampleSelectionandOutliers. . . . . . . . . . . . . . . . 69
6.2 RobustnesstoInstitutionalIndicators. .. . . . .. . . . .. . . .. . . . .. 72
6.3 RobustnesstoEndowmentIndicators. . . . .. . . . . . . .. . . . . . . .. 79
6.4 LimitingtheRangeintheDistributionofEndowments
toFrenchRange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
7 ExploringtheMechanismofColonialRule. . . . . . . . . . . . . . . . . . . 93
7.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
7.2 ColonialRuleintheBritishandFrenchEmpires. . . . . . . . . . . . . 95
7.3 EmpiricalAnalysisoftheColonialRuleMechanism. . . . . . . . . . 101
8 TheLegacyofEuropeanColonialismonRelevantDeterminantsof
InstitutionalDevelopment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
9 Conclusions. . . . . . . . . .. . . . . . . . . . . . . . .. . . . . . . . . . . . . . . .. . . 113
Appendix:TablesandFigures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
Chapter 1
Introduction
“Thecentralissueofeconomichistoryandofeconomic
developmentistoaccountfortheevolutionofpoliticaland
economicinstitutionsthatcreateaneconomicenvironment
thatinducesincreasingproductivity”
DouglassC.North(1991,p.98)
Abstract Institutionsareseen asafundamental requirementforeconomicdevel-
opment, since they form the incentive structure of economic agents and are
considered essential for the proper functioning of the economy. The immediate
question that follows is what factors explain the quality of institutions. Many
scholarshavesoughttheanswertothisquestionincolonialism.Ourstudyisrooted
in this renewed interest. Several factors have been highlighted to explain this
different legacy of colonialism on subsequent institutional development. A first
groupofauthorsemphasizestheidentityofthecolonizer,withthehypothesisthat
certain colonial powers (particularly Britain) implemented more benign colonial
policiesandtransferredbetterinstitutionstotheircoloniesthanothers,whichledto
higherinstitutionaldevelopment.Asecondgroupfocusesontheinitialconditions
existing in colonized territories, arguing that factors such as the disease environ-
ment, indigenouspopulation density orresourcesabundance determinedthe colo-
nial strategy of all Western powers in largely similar ways, thereby shaping the
incentives to create different types of institutions. In this debate we advocate an
intermediate (eclectic) view, since historical examples and systematic analysis of
the data show that colonial origin and endowments as well as their interaction
should be important factors in the formation and subsequent development of
institutions. This analysis is framed within a simple model of two styles of impe-
rialismthatintegratesthecolonialoriginandendowmentviews.
1.1 On the Importance of Institutions
Institutions are seen as a fundamental requirement for economic development.
Since the work of North and Thomas (1973) and North (1981, 1991), many
economists have been concerned about the economic impact of institutions,
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D.Oto-Peral´ıas,D.Romero-A´vila,ColonialTheoriesofInstitutionalDevelopment,
ContributionstoEconomics,DOI10.1007/978-3-319-54127-3_1