Institutional Explanations of Economic Development: The Role of Precious Metals

35 Pages Posted: 16 Nov 2005

See all articles by Elissaios Papyrakis

Elissaios Papyrakis

VU University Amsterdam - Institute for Environmental Studies (IVM)

Reyer Gerlagh

Tilburg University - Tilburg University School of Economics and Management

Date Written: November 2005

Abstract

Recent research has emphasized the influence of colonization on the institutional development and economic performance in former European colonies. Where European colonizers settled, they replicated the investment-conducive institutions found at home. It has been argued that a harsh disease environment and a highly urbanized native population worked against colonization. We show evidence for another significant element explaining the endogenous character of colonization strategies and the formation of institutions. We find the presence of precious metals, gold and silver, to imply an increase in settlements, and an improvement in institutional quality, even when correcting for settlements. Highly valued gold and silver reserves attracted Europeans in large numbers and resulted in an institutional upgrade of mineral-rich areas.

Keywords: Precious Metals, Institutions, Economic Development

JEL Classification: O13, O17, Q33

Suggested Citation

Papyrakis, Elissaios and Gerlagh, Reyer, Institutional Explanations of Economic Development: The Role of Precious Metals (November 2005). FEEM Working Paper No. 131.05. Available at SSRN: https://ssrn.com/abstract=847609 or http://dx.doi.org/10.2139/ssrn.847609

Elissaios Papyrakis (Contact Author)

VU University Amsterdam - Institute for Environmental Studies (IVM) ( email )

De Boelelaan 1115
Amsterdam, 1081 HV
Netherlands
+31 20 44 49502 (Phone)
+31 20 44 49553 (Fax)

Reyer Gerlagh

Tilburg University - Tilburg University School of Economics and Management ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

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