Persistence of Fortune

Anne McCants, Massachusetts Institute of Technology (MIT)
Daniel Seligson, Independent scholar

A dominant explanatory paradigm in the literature of long run economic development and inequality of global outcomes has emerged out of the 2002 work of Acemoglu, Johnson and Robinson hypothesizing a so-called ‘reversal of fortune’ (QJE, V. 117:4). This formulation attributes primary causal power in the shaping of the modern distribution of GNP to the institutional legacies of European colonial powers, especially with regard to a distinction between settler colonies bequeathed ‘good’ institutions and extractive colonies saddled with dysfunctional institutions. As consistent with their title, this view argues that more advanced economies, as proxied by estimated level of urbanization in 1500, were uniquely enticing and presumably also susceptible to the extractive appetites of European colonizers, whereas poorer and less densely occupied regions were open to European settlement and the subsequent benefit therefrom. We revisit the AJR hypothesis, utilizing alternative measures of the relevant dependent and independent variables. We find that their conclusions are very sensitive to the choice of variables and encodings. By our analysis, if urbanization in 1500 had any impact on the present at all, it points toward persistence rather than reversal of fortune.

No extended abstract or paper available

 Presented in Session 21. Replicate This! Revisiting Past Findings in Interdisciplinary Scholarship