The Persistence of (Subnational) Fortune

51 Pages Posted: 19 Feb 2014

See all articles by William F. Maloney

William F. Maloney

World Bank - Poverty and Economic Management Unit; IZA Institute of Labor Economics; World Bank - Development Research Group (DECRG)

Felipe Valencia Caicedo

Vancouver School of Economics

Multiple version iconThere are 3 versions of this paper

Date Written: November 7, 2013

Abstract

Using subnational historical data, this paper establishes the within country persistence of economic activity in the New World over the last half millennium, a period including the trauma of the European colonization, the decimation of the native populations, and the imposition of potentially growth inhibiting institutions. We construct a data set incorporating measures of pre-colonial population density, new measures of present regional per capita income and population, and a comprehensive set of locational fundamentals. These fundamentals are shown to have explanatory power: native populations throughout the hemisphere were found in more livable and productive places. We then show that high pre-colonial density areas tend to be dense today: population agglomerations persist. The data and historical evidence suggest this is due partly to locational fundamentals, but also to classic agglomeration effects: colonialists established settlements near existing native populations for reasons of labor, trade, knowledge and defense. The paper then shows that high density (historically prosperous) areas also tend to have higher incomes today, and largely due to agglomeration effects: fortune persists for the United States and most of Latin America.

Keywords: Persistence, Subnational Growth, Geography, Agglomeration, Path Dependence

JEL Classification: J1, N9, R1, O1, O49

Suggested Citation

Maloney, William F. and Valencia Caicedo, Felipe, The Persistence of (Subnational) Fortune (November 7, 2013). Available at SSRN: https://ssrn.com/abstract=2397299 or http://dx.doi.org/10.2139/ssrn.2397299

William F. Maloney (Contact Author)

World Bank - Poverty and Economic Management Unit ( email )

1818 H Street NW
Washington, DC 20433
United States
202-473-6340 (Phone)
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IZA Institute of Labor Economics

P.O. Box 7240
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Germany

World Bank - Development Research Group (DECRG)

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Washington, DC 20433
United States

Felipe Valencia Caicedo

Vancouver School of Economics ( email )

997-1873 East Mall
Vancouver, BC V6T 1Z1
Canada

HOME PAGE: http://https://economics.ubc.ca/faculty-and-staff/felipe-valencia-caicedo/

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