Natural resources, settler economies and economic development during the first globalization

300 Pages·2012·2.64 MB·English

DEPARTAMENTO DE HIST ORIA ECONÓMICA E
INSTITUCIONES

“NATURAL RESOURCES, SETTLER ECONOMIES AND

ECONOMIC DEVELOPMENT DURING THE FIRST
GLOBALIZATION: LAND FR ONTIER EXPANSION AND
INSTITUTIONAL ARRANGEM ENTS”

Henry Willebald

Septem ber, 2011
00
2
3
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UNIVERSIDAD CARLOS III DE MADRID

TESIS DOCTORAL

Natural Resources, Settler Economies and
Economic Development during the First
Globalization: Land Frontier Expansion and
Institutional Arrangements

Autor:
Henry Francisco Willebald Remedios

Director:

Leandro Prados de la Escosura

DEPARTAMENTO DE HISTORIA ECONÓMICA E INSTITUCIONES

Getafe, Septiembre, 2011

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TESIS DOCTORAL

Natural Resources, Settler Economies and Economic
Development during the First Globalization: Land Frontier
Expansion and Institutional Arrangements

Autor: Henry Francisco Willebald Remedios

Director: Leandro Prados de la Escosura

Firma del Tribunal Calificador:

Firma
Presidente:

Vocal:

Vocal:

Vocal:

Secretario:

Calificación:

Getafe, de de

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Resumen .................................................................................................................. 11

Chapter 1. Presentation and introduction ........................................................... 19
1. Motivation and initial questions…………………………………………………………….. 19
1.1 Motivation: the unequal evolution between “equals” ………………………………….. 19
1.2 Initial questions and hypotheses ………………………………………………………. 23
2. Some “stylized facts” of the settler economies during the First Globalization…………….. 25
2.1 Economic growth……………………………………………………………………….. 26
2.2 Primary productive specialization .……………………………………………………. 27
2.3 Evolution of income distribution……………………………………………………….. 28
2.4 What happened within the “club”?……………………………………………………… 29
3. Abundance of natural resources and economic development………………………………. 37
3.1 The notion of natural capital …………………………………………………………… 37
3.2 The debate: “curse” or “blessing”? ……………………………………………………… 38
3.3 Natural resource abundance as a blessing……………………………………………….. 40
3.4 The productive structure approach: the curse and primary specialization……………..... 42
3.5 The crowding out approach: natural capital displaces other capital modalities………… 47
3.6 Factor endowment and the institutional change hypothesis: natural resources, path
dependence and institutional legacy…………………………………………………….. 50
3.7 Remarks and summary………………………………………………………………….. 51
4. Hypotheses and structure of the Thesis……………………………………………………… 53
4.1 Line of argument and hypotheses…………………………………………………......... 54
4.2 Structure of the Thesis………………………………………………………………….. 56
Appendix to Chapter 1. Statistical sources .............................................................................. 60
1. GDP per capita…………………………………………………………………………………………………. 60
2. Productive structure……………………………………………………………………………………………. 60
3. Wage/rental rate ratio………………………………………………………………………………………….. 60

Chapter 2. Land abundance, frontier expansion and income distribution in
settler economies during the First Globalization (1870-1913): analytical
framework .......................................................................................................... 61
1. Stylized facts and the “canonical” model: comments and limitations……………………… 62
2. A complementary view to H-O-S approach: the importance of endogenous land frontier
expansion…………………………………………………………………………………… 67
2.1 Main characteristics of the initial model……………………………………………….. 67
2.2 The dynamics of the First Globalization: how does the model work?............................. 70
2.3 General overview……………………………………………………………………….. 79
3. Why is endogenous land frontier expansion a useful analytical concept?............................. 80
3.1 Our contributions to the model…………………………………………………………. 81
3.2 Numerical analysis……………………………………………………………………… 83
4. The curse and natural resources: institutional quality and the appropriability hypothesis…. 87
4.1 The curse of natural resources abundance: the institutional explanation………………. 88
4.2 The appropriability hypothesis…………………………………………………………. 89
5. Highlights and final remarks……………………………………………………………….. 91
Appendix to Chapter 2. Formal presentation of the model .................................................... 94
1. Initial version…………………………………………………………………………………………………… 94
1.1 Production and utility functions…………………………………………………………………………… 94
1.2 Profit maximization and resolution of k ………………………………………………………………….. 95
1.3 Resolution of w …………………………………………………………………………………………… 96
1.4 Resolution of n ……………………………………………………………………………………………. 96
1.5 Rest of variables …………………………………………………………………………………………… 98
2. Selection of parameters and discussion of the results for Findlay- Lundahl model…………………………….. 98
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2.1 Parameters and discussion ………………………………………………………………………………… 98
2.2 Results of the simulation exercises………………………………………………………………………… 100
2.3 References…………………………………………………………………………………………………. 103
3. Revision of the model: our proposal…………………………………………………………………………… 104
3.1 Production and utility functions………………………………………………………………………….... 104
3.2 Profit maximization and resolution of k ………………………………………………………………….. 105
3.3 Resolution of w …………………………………………………………………………………………… 106
3.4 Resolution of n ……………………………………………………………………………………………. 107
3.5 Rest of variables ………………………………………………………………………………………….. 109
4. Selection of parameters and discussion of the results in our model…………………………………………… 109
4.1 Parameters and discussion ………………………………………………………………………………… 109
4.2 Results of the simulation exercises ……………………………………………………………………….. 111

Chapter 3. Land frontier expansion: concepts and measures applied to settler
economies in historical perspective (1850-1920) ............................................ 113
1. Is land frontier expansion a classical concept that has come back?....................................... 114
2. Measuring land frontier expansion…………………………………………………………. 120
2.1 Recent quantification efforts …………………………………………………………... 120
2.2 Some observations and shortcomings………………………………………………….. 122
3. A proposal for approaching land frontier expansion………………………………………. 123
3.1 How can we solve the shortcomings of the previous approach?..................................... 123
3.2 Data…………………………………………………………………………………….. 142
4. Land frontier expansion in terms of “quality”: our results………………………………… 143
4.1 In accordance with the country’s current surface area………………………………… 143
4.2 In accordance with grassland: our proposal…………………………………………… 145
4.3 In accordance with grassland and distance: an illustration of “land quality”…………. 155
5. Conclusions and final remarks…………………………………………………………….. 157
Appendix to Chapter 3. Historical application of GIS tools and methodological questions 158
1. GIS: methodological strategy…………………………………………………………………………………. 158
2. Critical analysis of the data: limitations and decisions……………………………………………………….. 160

Chapter 4. Inequality patterns: concepts and measures applied to settler
economies in historical perspective (1870-1913) ............................................. 163
1. Land distribution in the eve of WWI……………………………………………………….. 164
1.1 Data and results…………………………………………………………………………. 164
1.2 Analysis and shortcomings……………………………………………………………... 166
2. Agrarian functional income distribution……………………………………………………. 169
2.1 Two distributive patterns………………………………………………………………... 170
2.2 Income evolution in the face of the First Globalization…………………………………. 173
3. Final remarks………………………………………………………………………………… 178
Appendix 1 to Chapter 4. Inequality measures ……………………………………………… 181
1. Gini Index……………………………………………………………………………………………………….. 181
2. Generalized Entropy indexes…………………………………………………………………………………… 181
Appendix 2 to Chapter 4. Functional income distribution: estimation methodology, sources
and assumptions ..................................................................................................................... 182
1. Introduction ……………………………………………………………………………………………………. 182
1.1 Agrarian income…………………………………………………………………………………………… 182
1.2 Land income……………………………………………………………………………………………….. 183
1.3 Labour income… …………………………………………………………………………………………... 184
2. Argentina……………………………………………………………………………………………………….. 185
2.1 Agrarian product ………………………………………………………………………………………….. 185
2.2 Rents……………………………………………………………………………………………………….. 186
2.3 Wages………………………………………………………………………………………………………. 189
3. Australia……………………………………………………………………………………………………….... 190
3.1 Agrarian product …………………………………………………………………………………………… 191
3.2 Rents……………………………………………………………………………………………………….. 191
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3.3 Wages……………………………………………………………………………………………………… 193
4. Canada………………………………………………………………………………………………………...... 194
4.1 Agrarian product ………………………………………………………………………………………….. 195
4.2 Rents ……………………………………………………………………………………………………… 195
4.3 Wages …………………………………………………………………………………………………….. 196
5. Chile………………………………………………………………………………………………………........ 197
5.1 Agrarian product………………………………………………………………………………………….. 198
5.2 Rents……………………………………………………………………………………………………… 198
5.3 Wages……………………………………………………………………………………………………… 201
6. New Zealand…………………………………………………………………………………………………… 202
6.1 Agrarian product ………………………………………………………………………………………….. 202
6.2 Rents……………………………………………………………………………………………………… 203
6.3 Wages……………………………………………………………………………………………………… 205
7. Uruguay………………………………………………………………………………………………………… 205
7.1 Agrarian product …………………………………………………………………………………………. 206
7.2 Wages……………………………………………………………………………………………………… 206
7.3 Rents……………………………………………………………………………………………………….. 208
8. Our estimates…………………………………………………………………………………………………… 210
9. References……………………………………………………………………………………………………… 210

Chapter 5. Natural resources and institutional quality: the hypothesis of
appropriability revisited from an historical perspective ............................... 217
1. Institutional quality and the appropriability hypothesis…………………………………….. 219
1.1 Our model………………………………………………………………………………. 220
1.2 Results…………………………………………………………………………………... 228
1.3 Highlights and shortcomings…………………………………………………………… 235
2. Appropriability and the formation of the land ownership system…………………………. 237
2.1 Land tenure systems: characteristics and conditions ………………………………….. 237
2.2 Australasia: the definition of ownership rights and the intensification of settlement…. 239
2.3 The River Plate: land-ownership concentration and weak states……………………… 250
2.4 Discussion about the main characteristics: two “models” of land tenure systems…….. 260
3. Conclusions and final remarks…………………………………………………………….. 265
Appendix to Chapter 5. Institutional quality indicators and database ................................. 267
1. Polity IV: constraints on the executive…………………………………………………………………………. 267
1.1 Presentation………………………………………………………………………………………………… 267
1.2 Time coverage……………………………………………………………………………………………… 267
2. CIM: contract-intensive money……………………………………………………………………………….... 268
2.1 Presentation………………………………………………………………………………………………… 268
2.2 Sources…………………………………………………………………………………………………….. 268
3. Database for econometric exercises……………………………………………………………………………. 269

Chapter 6. Conclusions, final remarks and contributions ................................ 271

References ............................................................................................................... 281

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Acknowledgements

I would like to thank the Instituto Laureano Figuerola, Universidad Carlos III, Madrid, for its
financial support, and I am grateful for the constant support and advice of the members of the
Department of Economic History and Institutions. I am especially grateful for the comments,
suggestions and advice from my supervisor, Leandro Prados de la Escosura, who improved the
results of my research significantly. I would like to express my gratitude to Antonio Tena Junguito,
Stefano Battilossi and Joan Rosés for their constant encouragement and guidance, and Stefan
Houpt, Juan Carmona and Carlos Álvarez for their useful suggestions and warm consideration.
Additionally, I am extremely thankful to two special people that offered their thoughts and kindness
not only as colleagues, but also as friends; they are Juan Huitzilihuitl Flores and Cecilia Font.
Likewise, I am thankful for the help of Luis Bértola, who encouraged the carrying out of the project
with his generous recommendations and was closely involved from the very beginning. In addition,
I am grateful to the Globalizing Europe Economic History Network (Globaleuronet) for providing
the financial support to attend three summer schools –in Tartu (Estonia), Paris (France), and Lisbon
(Portugal)– and a research visit at the University of Groningen (The Netherlands). I am also grateful
to Universidad Carlos III, Madrid, for promoting and financing my visit at University of Barcelona
during two months. Finally, I would like to thank the Instituto de Economía, Universidad de la
República, Uruguay, and the members of two projects where I participated –“Historical Patterns of
Development and Underdevelopment: Origins and Persistence of the Great divergence (HI-POD)”
and “Nuevas Interpretaciones sobre la Integración Económica de las Periferias Europeas y Latino
Americanas entre 1850-1950” (UC3M)– for providing me with an excellent space for working and
for fruitful debate.
For Chapter 2, I was fortunate enough to count on the collaboration of Gregorio Mednik, Jonatan
Saúl and Pablo Berger for the derivation and discussion of the analytical model. Pablo Berger also
collaborated on the calibration and numerical resolution of the model.
For Chapter 3, I had the support of Eugenia Riaño in the application of GIS tools and for the
construction of the indicators of land frontier expansion. I would also like to express my gratitude
for the advice of Virginia Fernández and the answers of Klein Goldewijk about the database.
For Chapter 4, Javier Rodríguez Weber collaborated on the estimates of income distribution in
Chile and Jorge Álvarez participated in several stages of the research.
For Chapter 5, I counted on the support of Carolina Román for the econometrics exercises.
Richard Manning corrected the final English version of the document.
I would also like to thank the participants of seminars and conferences where I presented
advances and preliminary results of my Thesis. I would especially like to mention Leticia Arroyo
Abad, Marc Badía-Miró, Jörg Baten, Reto Bertoni, Gustavo Bittencourt, Albert Carreras, Anna
Carreras Marin, Sergio Espuelas, Sebastián Fleitas, Ewout Frankema, Jordi Guilera, Alfonso
Herranz, Herman de Jong, Zoe Kuehn, Julio Martinez-Galarraga, María Inés Moraes, Esteban
Nicoloni, Alan Olmstead, Vicente Pinilla, Blanca Sánchez, Isabel Sanz, Enric Tello, Jeffrey
Williamson, Pieter Woltjer, César Yañez, and Jan Luiten van Zanden.
Finally, for their support (and patience!), I would like to thank the many friends, my mother and,
especially, Carolina, who followed the successive stages of this research project and attentively read
the document in all of its different versions.

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