Factor Endowments, Inequality, and Paths of Development Among New World Economics

55 Pages Posted: 11 Oct 2002  

Stanley L. Engerman

University of Rochester - Department of Economics; National Bureau of Economic Research (NBER)

Kenneth L. Sokoloff

University of California, Los Angeles (UCLA) - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: October 2002

Abstract

Whereas traditional explanations of differences in long-run paths of development across the Americas generally point to the significance of differences in national heritage or religion, we highlight the relevance of stark contrasts in the degree of inequality in wealth, human capital, and political power in accounting for how fundamental economic institutions evolved over time. We argue, moreover, that the roots of these disparities in the extent of inequality lay in differences in the initial factor endowments (dating back to the era of European colonization). We document -- through comparative studies of suffrage, public land, and schooling policies -- systematic patterns by which societies in the Americas that began with more extreme inequality or heterogeneity in the population were more likely to develop institutional structures that greatly advantaged members of elite classes (and disadvantaging the bulk of the population) by providing them with more political influence and access to economic opportunities. The clear implication is that institutions should not be presumed to be exogenous; economists need to learn more about where they come from to understand their relation to economic development. Our findings not only contribute to our knowledge of why extreme differences in the extent of inequality across New World economies have persisted for centuries, but also to the study of processes of long-run economic growth past and present.

Suggested Citation

Engerman, Stanley L. and Sokoloff, Kenneth L., Factor Endowments, Inequality, and Paths of Development Among New World Economics (October 2002). NBER Working Paper No. w9259. Available at SSRN: https://ssrn.com/abstract=338866

Stanley L. Engerman (Contact Author)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
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University of Rochester - Department of Economics ( email )

Harkness Hall
Rochester, NY 14627-0158
United States
585-275-3165 (Phone)

Kenneth L. Sokoloff

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

University of California, Los Angeles (UCLA) - Department of Economics ( email )

Box 951477
Los Angeles, CA 90095-1477
United States
310-825-4249,310-825-1011 (Phone)
310-825-9528 (Fax)

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