The Reversal of Fortune Thesis Reconsidered

29 Pages Posted: 30 Nov 2010

See all articles by Sanghamitra Bandyopadhyay

Sanghamitra Bandyopadhyay

London School of Economics & Political Science (LSE) - Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD)

Elliott D. Green

London School of Economics

Date Written: April 2010

Abstract

Acemoglu, Johnson, & Robinson (2002) have claimed that the world income distribution underwent a Reversal of Fortune from 1500 to the present, whereby formerly rich countries in what is now the developing world became poor while poor ones grew rich. We question their analysis with regard to both of their proxies for pre-modern income, namely urbanization and population density. First, an alternative measure of urbanization with more observations generates a positive (but not significant) correlation between pre-modern and contemporary income. Second, we show that their measure of population density as a proxy is highly flawed inasmuch as it does not properly measure density on arable land, and when corrected with better data the relationship is no longer robust. At best our results demonstrate a Reversal of Fortune only for the four neo-Europes of Australia, Canada, New Zealand and the United States; at worst, we show no Reversal for other former colonies.

JEL Classification: D91, I18

Suggested Citation

Bandyopadhyay, Sanghamitra and Green, Elliott D., The Reversal of Fortune Thesis Reconsidered (April 2010). LSE STICERD Research Paper No. EOPP016, Available at SSRN: https://ssrn.com/abstract=1717448

Sanghamitra Bandyopadhyay (Contact Author)

London School of Economics & Political Science (LSE) - Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD) ( email )

Houghton Street
London WC2A 2AE
United Kingdom

Elliott D. Green

London School of Economics ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

HOME PAGE: http://personal.lse.ac.uk/greened/

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