To date, there is accumulating evidence that colonial history matters for development today. The study of the relative role of human capital and institutions in the explanation of the colonial origins of economic development has generated lengthy debate among economists that analyze the role of institutions and human capital in separate empirical frameworks. This project will make three important contributions to this literature: First, I am going to analyze the two competing theories in the same empirical framework (the literature has analyzed the two frameworks separately). Second, I am going to use measures of initial human capital and institutions at the initial stage of colonization. This is very important since this literature has used measures of institutions and human capital that are endogenous, since they are measured in relatively contemporaneous time periods. The traditional solution to endogeneity problems has generally been to look for instruments that seek to capture the initial situation during colonization that led to the creation of a particular type of institution or the attraction of a particular type of human capital. Or to use case studies. In this project, since I will measure human capital and institutions at the initial period, under the starting conditions, I provide a possible solution, since the starting conditions of colonization are more likely to be exogenous. Additionally, since I have the original human capital and institutions, I can analyze the interaction in the same framework. Third, I am going to use sub-national variation.
The approach I am taking is to analyze the Spanish colonization of Latin America, whereby I use administrative data on the first colonizers of Latin America, and using within-country analysis since we have information on the precise destinations of the first “pobladores” (settlers) and different institutional set-ups for different geographical areas in Latin America. Since we are using the period immediately after the initial colonization, the original distribution by occupation of the first settlers is likely to be accidental, as they were not yet aware of the characteristics of the land that had yet to be discovered.
This project is highly related with the SDG’s, in particular Goal 16 dedicated to the promotion of peaceful and inclusive societies for sustainable development, the provision of access to justice for all, and building effective, accountable institutions at all levels. The data generated by the project can be used to examine, for example, the effect of Human Capital and Institutions and the interaction between original institutions and human capital in the explanation of current economic development and conflict, which is the relevant question.
This is a highly relevant topic for understanding the “underpinnings” of economic development. This analysis will contribute to this debate. Moreover, the advantages and potential of this information opens up many possibilities for a new ground-breaking research agenda on the study of the colonial origins of economic development.