Econ 1340: World Economic History

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1 Econ 1340: World Economic History Lecture 16 Camilo Gracía-Jimeno University of Pennsylvania April 4, 2011 Camilo Gracía-Jimeno (University of Pennsylvania)Econ 1340: World Economic History April 4, / 24

2 Institutional Persistence In the last four lectures the course has examined the patterns of di usion of the British Industrial Revolution over the 19th Century. The lectures focused on the idea that it was institutional di erences which have played the key role in explaining patterns of dissemination and we studied some ideas about how the institutions of di erent parts of the world ended up looking like they did. But the question arises as to whether the pattern of institutions in 1750 or 1800, though it might explain the initial dissemination of the industrial revolution, has any relevance to today. I think the answer is yes because institutional structures are very persistent over time. Both inclusive institutions and extractive institutions contain important feedback mechanisms which lead them to persist. These create virtuous and vicious circles, respectively. Camilo Gracía-Jimeno (University of Pennsylvania)Econ 1340: World Economic History April 4, / 24

3 Virtuous Circles After initiating the industrial revolution Britain, Western Europe and the Neo-Europes moved onto a path of sustained rises in living standards that has lasted until now (with a few ups and downs like the Great Depression). Earlier in the course Professor Robinson emphasized the historical rise and fall of di erent societies. Why didn t Britain or Western Europe rise and fall? Maybe they were lucky. If another version of the Black Death had come along in the 1840s and killed 60% of Europe s population the economic dynamism might have collapsed. The argument I propose is that this was because they had managed to solve the political problems which had led to the demise of previous successful societies like Rome or Copán. To create secure property rights and a level playing eld political power had to be constrained and distributed. This led to far fewer rents from holding power, fewer power struggles, greater stability. Camilo Gracía-Jimeno (University of Pennsylvania)Econ 1340: World Economic History April 4, / 24

4 Virtuous Circles The basic idea is that once you have a pluralistic political system with a centralized state, though inclusive institutions can be challenged and even undermined, there are strong tendencies for them to remain in place. The even distribution of political power and economic opportunities makes it di cult for any group of individuals to try to move economic institutions in an extractive direction. The fact that inclusive institutions do not generate large amount of rents at the center also reduce the incentive from groups to try to create extractive political institutions. Camilo Gracía-Jimeno (University of Pennsylvania)Econ 1340: World Economic History April 4, / 24

5 Structural Change The political settlement of 1688 in Britain could not endure for ever. It was more like an elite pact but one which as we saw in the discussion of the Glorious Revolution and the Black Act, created pluralism and the rule of law. Industrialization led to large structural changes in society and urbanization and the factory system concentrated large numbers of politically disenfranchised people in the same place where it was much easier to solve the collective action problem. Leaving these people outside the system risked revolution, but incorporating them risked destabilizing property rights (threat of populism, etc.). These di erent perspectives were intensively debated and the First Reform Act of 1832 in Britain was a compromise - to generate political stability with the smallest possible concession (by weakening property and wealth restrictions it doubled the number of adult males who had the vote to about 14.5% of the total number). Camilo Gracía-Jimeno (University of Pennsylvania)Econ 1340: World Economic History April 4, / 24

6 Democracy since 1800 the Polity Score Western Europe Latin America United States China Africa United Kingdom Japan

7 The Debate In an address to the British parliament in 1831 introducing a limited su rage extension the Prime Minister Earl Grey (yes he of the tea..) argued There is no-one more decided against annual parliaments, universal su rage and the ballot than I am. My object is not to favor, but to put an end to such hopes and projects... The principal of my reform is to prevent the necessity of revolution... reforming to preserve and not to overthrow. Viscount Cranborne, a leading 19th century Conservative described the reform struggle as a battle not of parties, but of classes and a portion of the great political struggle of our century - the struggle between property... and mere numbers. Quoted in Acemoglu and Robinson (2006) Economic Origins of Dictatorship and Democracy... pp. 22,27. amilo Gracía-Jimeno (University of Pennsylvania)Econ 1340: World Economic History April 4, / 24

8 Old Corruption The post Glorious Revolution system was not very democratic, with rotten boroughs and uncontested elections. The rise of the state, as documented by Brewer, also went along side by side with Old Corruption. Yet even prior to the 1832 Reform Act the British political elite began to self-reform. One thing they did was to start cleaning up Old Corruption by eliminating sinecures and venal o ceholding. Camilo Gracía-Jimeno (University of Pennsylvania)Econ 1340: World Economic History April 4, / 24

9 English Rotten Boroughs For example, in 1831: Old Sarum in Wiltshire had 3 houses and 7 voters East Looe in Cornwall had 167 houses and 38 voters Dunwich in Suffolk had 44 houses and 32 voters (the bulk of the settlements in the borough having fallen into the sea) Plympton Erle in Devon had 182 houses and 40 voters Gatton in Surrey had 23 houses and 7 voters Newtown on the Isle of Wight had 14 houses and 23 voters Bramber in West Sussex had 35 houses and 20 voters Callington in Cornwall had 225 houses and 42 voters All of these boroughs could elect two MPs. At one point, out of 405 elected MPs, 293 were chosen by fewer than 500 voters each. Meanwhile neither Birmingham nor Manchester had any representation in the House of Commons.

10 Eliminating Sinecures in England Source: Harling, Philip (1996) The Waning of Old Corruption, Clarendon Press, p. 21.

11 Uncontested Elections in England, Source: John Cannon (1973) Parliamentary Reform, , Cambridge University Press, pp

12 Reaction in Russia An alternative was to oppose the changes which led to structural change in the rst place, this happened in a large number of cases. For instance, Alexander Gerschenkron (1970. Europe in the Russian Mirror: Four Lectures in Economic History. New York: Cambridge University Press.) argued that in the case of Austria-Hungary, the state not only failed to promote industrialization, but rather economic progress began to be viewed with great suspicion and the railroads came to be regarded, not as welcome carriers of goods and persons, but as carriers of the dreaded revolution. Then the State clearly became an obstacle to the economic development of the country. (1970 p. 89). amilo Gracía-Jimeno (University of Pennsylvania)Econ 1340: World Economic History April 4, / 24

13 ... and in Austria Jerome Blum (1943, Transportation and Industry in Austria, , Journal of Modern History, 15, ) also pointed to the same forces as the major blockage to industrialization arguing (p. 26) that these living forces of the traditional economic system were the greatest barrier to development. Their chief supporter was... Emperor Francis. He knew that the advances in the techniques of production threatened the life of the old order of which he was so determined a protector. Because of his unique position as nal arbiter of all proposals for change he could stem the ood for a time. Thus when plans for the construction of a steam railroad were put before him, he refused to give consent to their execution lest revolution might come into the country. amilo Gracía-Jimeno (University of Pennsylvania)Econ 1340: World Economic History April 4, / 24

14 The Virtuous Reaction Here the power of British elites was challenged, they faced being political losers from the process of industrialization and structural change. But they responded not by trying to repress opponents and retract pluralism, but by further liberalizing the system. That they did so is due to the logic of the virtuous circle. 1 The pluralistic distribution of political power would have made repression di cult and possibly ine ective. 2 The inclusive economic institutions the elite had less to lose from democracy than their sister elites in Eastern Europe and it would have been very di cult to reverse these inclusive economic institutions. Camilo Gracía-Jimeno (University of Pennsylvania)Econ 1340: World Economic History April 4, / 24

15 The Coevolution of Income and Democracy In Britain a virtuous circle of institutional reform and increasing income developed, in other places as we ll see on Wednesday, vicious circles emerged with bad institutions leading to low incomes and further reinforcing bad institutions. One way of thinking about these circles is in the paper by Acemoglu, Johnson, Robinson and Yared (AJRY) Income and Democracy. To note that incomes and political institutions are strongly correlated across countries look at Figure 3 which shows the cross-sectional relationship between income per-capita and a measure of democracy. Political scientists like to think of this as showing modernization - as countries become richer this process of economic growth leads to institutional change and democracy. Camilo Gracía-Jimeno (University of Pennsylvania)Econ 1340: World Economic History April 4, / 24

16 Freedom House Political Rights Index ZAR TZA ETH CRILCA BLZ TTO GRC MLT PRT CYP BRB ESP NZL IRLGBR FIN ITA FRA SWE DEU BEL NLDNOR AUT ISL AUS CANCHE DNK USALUX GRD KNA LTU MUS BHS JPN URY HUN ISR STP CPV DMA POL VCT BOL BWA EST ARG PNGJAM NAM LVA ECU BGR CHL KOR MNG BEN BRA VEN BGD HND PHL MDG PAN GUY DOM SLV ZAF IND NPL TWN THA MLI COL NIC RUS GTM ROM LKA TUR PRY MEX ATG MWI ZMB CAF SEN PAK ALB JOR SYC GNB MOZ GHA FJI LSO COM MYS PER GAB SGP GMB COG MAR UGA BFA NER YEM ZWE HTI DJI KWT SLE KHM KEN NGA TCD CIV AGO BDI RWA MRT CMR LAO BTN SDNVNMGNQ Figure 3 Democracy and Income 1990s GIN CHN EGY TUN LBN DZA IRNSWZ IDN SYR CUB BHR SAU OMN QAT Log GDP per Capita (Penn World Tables)

17 Is there a Causal E ect of Income on Democracy? To test the modernization view an appealing set-up would involve panel data and country xed e ects to focus on the within variation - as countries become more prosperous, do they tend to become more democratic? A simple look at the data (Figures 1, 2 and 4) suggests that this is not obviously the case at all. Camilo Gracía-Jimeno (University of Pennsylvania)Econ 1340: World Economic History April 4, / 24

18 Change in Freedom House Political Rights Index ZAR GNQ Figure 1 Democracy Growth and Income Growth CAF NER MDG ZMB BDI TZA BEN MLI HND ARG BOL SEN PER GHA NIC MRTTCD CIV RWA GUYCHE NZL CRI DZA SWE DNK AUS MAR NLD GBR CAN FRA BEL USA ITA EGY PRY ISL AUT NOR TUN BRB IRL SYR SLE TGO VEN NGA IRN JAM SLV GMB PHL UGA CMR GTM BFA PAN GRC MWI HUN ECU NPL LSO HTI JOR ESP PRT BRA COG ZAFGIN ZWE MEX GAB TTO URY FIN ISR JPN LUX CHL DOM FJI KENTUR COL INDLKA ROM MUS CYP CHN MYSIDN THA SGP KOR TWN Change in Log GDP per Capita (Penn World Tables) BWA

19 Figure 2 Democracy Growth and Income Growth Change in Polity Composite Index GNQ PRT NIC NER GRC LSO HUNESP BRA ARG PAN MWI HTI PRY MLI BOL NPL CAF COG ROM MDG MEX ECU PER BEN GIN DOM SLVHND JOR ZMB TZASEN PHL DZA TGO TCD ZAF GUY GAB TUN IRN EGY CIV CMRUGA GTM URY MAR KEN CHL MRT NGA TTO FRA CHE NZL CRISWE DNK AUS NLD GBR CAN FIN TUR BEL USA COL ITA ISR IND ISL AUT JPNOR IRL SYR VEN RWA JAM BFA LKA GHA FJI SLE ZWE GMB TWN THA CYP KOR MYS MUS CHN BWA IDN SGP Change in Log GDP per Capita (Penn World Tables)

20 Figure 4 Democracy Growth and Income Growth PRT NOR Change in Polity Composite Index URY HUN BRA NLD ARG GBR BEL AUT SWEITA DNK MEX CAN USA GRC CHE VEN JPN CHN Change in Log GDP per Capita (Maddison)

21 Back in History Of course if there is a contemporary relationship between the levels, if you go back far enough in time, there has to be some sort of positive correlation between the growth rates. Figure 5 shows this is true for the change in income and the change in democracy since Does this prove that the modernization hypothesis is true but with long and variable lags to quote the famous monetary economist Milton Friedman out of context! AJRY argue no. Instead we propose that di erent societies move onto di erent development paths where income and democracy coevolve. Some circumstances lead a society to become prosperous and democratic, others lead it to be poor and undemocratic. This view suggests that if you could condition on the factors that determine the development path, there would be no causal e ect of income on democracy, even over a 500 year period. Camilo Gracía-Jimeno (University of Pennsylvania)Econ 1340: World Economic History April 4, / 24

22 Change in Democracy TCD Figure 5 Democracy Growth and Income Growth NER BGDZMB TZA GIN MDG MNG HTI MWI MLI CAF NPL GNB KHM TGO UGA BFA RWA TJK MOZ BENHND CMR IND GHA SEN MRTNGA CIV ZWE AZE BOL GEOALB DOM COG LKA ROM ARM GTM EGYDZA GNQ MMR SLE LAO SDN GMB VNMDJI CUBYUG CHN LBY IDN MAR IRQ NIC KEN PRK PAK LSOPHL KGZ TKM MDA SLV YEM UKR MKD PRY JAM ECU PER UZB SWZ IRN LTU CRI BWA LVATUR BGR POL HUNBRA CZE CHL VEN JOR BLR KAZ BHR ZAF PAN THA COL SVK ARG NAM RUS TUN HRV MYS GAB QAT URY PRT ESP SVN MUS GRC DEU AUT ITA TTOBEL NLD ISR EST MEX OMN SYR SAU GBR SWE IRL DNKCHE TWN FRA KOR KWT ARE NOR FINZL JPNAUS CAN Change in Log GDP per Capita SGP USA

23 Fixed E ects But what are these factors that determine the development path? The idea is that this is to do with the institutions of society but at some deeper level than democracy - AJRY did not have this idea when they wrote their paper but in the Acemoglu-Robinson book you have seen this in the discussion of pluralism and the rule of law. For the case of the former colonies, it is natural to link variation in these underlying institutions to the conditions that seem to have in uenced whether or not a society got extractive or inclusive institutions - historical settler mortality, historical population density etc. Statistically we can capture the propensity of a country to be democratic by using country-speci c intercepts - called xed e ects. Camilo Gracía-Jimeno (University of Pennsylvania)Econ 1340: World Economic History April 4, / 24

24 Conditioning on Historical Factors We can then plot these xed e ects (but not really legitimate because you actually cannot consistently estimate them - for the econometricians in the audience the asymptotics are on the number of countries) and see if they are correlated with data which captures the historical conditions which in uenced institutions. There are signi cant correlations. Moreover, once you do a statical analysis and condition on these historical variables which in uence institutional creation there is no evidence of modernization either. This suggests that the correlation between income per-capita and democracy is actually caused by the more basic institutional structure of society (pluralism, rule of law). Camilo Gracía-Jimeno (University of Pennsylvania)Econ 1340: World Economic History April 4, / 24

25 Figure 6 Democracy Fixed Effect and Log Settler Mortality Democracy Fixed Effect AUS NZL USA CAN ZAF MYS SGP IND PAK_1 GUY PAK CRI TTO VEN URY ARG COL CHL SLV LKA MEX BRA PER GTM BOL ECU HND PRY MAR BGD TUN EGY DZA JAM DOM PNG PAN NIC SEN IDN GNB HTI KEN VNM GAB BEN CAF BFA COG TZA CMR UGA MRT AGO TCD RWA BDI ZAR GIN MDG NERSLE GHA CIV TGO GMB NGA MLI Log Settler Mortality

26 Democracy Fixed Effect CAN AUS Figure 7 Democracy Fixed Effect and Log Population Density 1500 USA SGP URY ARG BWA NAM BRA GUY NZL VEN TTO CRI JAM PNG ZAF COL CHL SLV IND MEX LKA DOM MYSPER PHL BOL GTMECU PAK_1 PAN NIC HND PRY SEN MAR GAB MDG GMB BGD PAK ZWE MOZ GHA LSO IDN ZMB DZA TUN CAF BEN MWI MLI BFA NGA CIV GNB COM NER SLE HTI CMR COG TZAKEN GIN MRTTGO UGA CUB TCD AGO KHM RWA GNQ BDI ZAR Log Population Density 1500 VNM EGY

27 Democracy Fixed Effect Figure 8 Democracy Fixed Effect and Constraint on the Executive at Independence VEN URY ARG CHL BRA GTM NIC PRY GHA TUN DZA CAF MWI CIV HTI GIN TCD RWA KHM GNQ ZAR MAR GAB MOZ ZMB BEN BFA BDI TGO MLI CRI SLV COL MEX DOM PER ECU PAN BOL SGP HND SEN MDG BGD COM GNB NER TZA CMR COG MRT AGO CUB VNM LSO PAK KEN PHL PAK_1 SLE NGA UGA BWA NAM GMB IDN EGY Constraint on the Executive at Independence GUY NZL USA AUS CAN TTO JAM PNG ZAF IND LKA MYS ZWE

28 Figure 10 Democracy Growth and Income Growth Conditional on Historical Factors Change in Democracy Independent of Historical Factors HTI MMR TCD MDG PAK BGD NER IND MLI JAM BEN CAF GNB PAN COG LKA CRI NIC ZAF ECU NZL BOL URY GIN GHACHL SLV VEN PRY AUS BRA HND DOM MYS TGO SEN TZA COL CAN ARG DZA GTM RWA USA EGY MEX UGA CMR BFA CIV NGA KEN SDN MRT PER GMB SGP MAR SLE VNM IDN LAO TTO TUN GAB Change in Log GDP per Capita Independent of Historical Factors

29 The Myth of the Frontier Another interesting example of the virtuous circle is the analysis of the impact of Frontier lands in the Americas in the 19th Century. A famous idea about the distinctive economic and political dynamics of the US is the Frontier (or Turner) thesis due to Frederick Jackson Turner in Turner postulated that the availability of the frontier had led to a particular type of person and had crucially determined the path of US society. The existence of an area of free land, its continuous recession, and the advance of American settlement westward, explain American Development. Behind institutions, behind constitutional forms and modi cations, lie the vital forces that call these organs into life and shape them to meet changing conditions. Turner (1920, pp. 1-2) amilo Gracía-Jimeno (University of Pennsylvania)Econ 1340: World Economic History April 4, / 24

30 Democracy and Social Mobility and Turner emphasized that the frontier created strong individualism and social mobility and his most forthright claim is that it was critical to the development of democracy. He noted the most important e ect of the frontier has been to promote democracy Turner (1920, p. 30) These free lands promoted individualism, economic equality, freedom to rise, democracy... American democracy is fundamentally the outcome of the experiences of the American people in dealing with the West. Turner (1920, pp. 259, 266) Moreover, the things that went along with democracy and helped to promote it, such as social mobility, most likely also stimulated economic performance. amilo Gracía-Jimeno (University of Pennsylvania)Econ 1340: World Economic History April 4, / 24

31 US Exceptionalism A different take: Comparative Development in the Americas Testing the Frontier Thesis Concluding A snapshot of US Frontier Expansion: 1790 García-Jimeno, Robinson Frontier

32 US Exceptionalism A different take: Comparative Development in the Americas Testing the Frontier Thesis Concluding A snapshot of US Frontier Expansion: 1800 García-Jimeno, Robinson Frontier

33 US Exceptionalism A different take: Comparative Development in the Americas Testing the Frontier Thesis Concluding A snapshot of US Frontier Expansion: 1810 García-Jimeno, Robinson Frontier

34 US Exceptionalism A different take: Comparative Development in the Americas Testing the Frontier Thesis Concluding A snapshot of US Frontier Expansion: 1820 García-Jimeno, Robinson Frontier

35 US Exceptionalism A different take: Comparative Development in the Americas Testing the Frontier Thesis Concluding A snapshot of US Frontier Expansion: 1830 García-Jimeno, Robinson Frontier

36 US Exceptionalism A different take: Comparative Development in the Americas Testing the Frontier Thesis Concluding A snapshot of US Frontier Expansion: 1840 García-Jimeno, Robinson Frontier

37 US Exceptionalism A different take: Comparative Development in the Americas Testing the Frontier Thesis Concluding A snapshot of US Frontier Expansion: 1850 García-Jimeno, Robinson Frontier

38 US Exceptionalism A different take: Comparative Development in the Americas Testing the Frontier Thesis Concluding A snapshot of US Frontier Expansion: 1860 García-Jimeno, Robinson Frontier

39 US Exceptionalism A different take: Comparative Development in the Americas Testing the Frontier Thesis Concluding A snapshot of US Frontier Expansion: 1870 García-Jimeno, Robinson Frontier

40 US Exceptionalism A different take: Comparative Development in the Americas Testing the Frontier Thesis Concluding A snapshot of US Frontier Expansion: 1880 García-Jimeno, Robinson Frontier

41 US Exceptionalism A different take: Comparative Development in the Americas Testing the Frontier Thesis Concluding A snapshot of US Frontier Expansion: 1890 García-Jimeno, Robinson Frontier

42 A Conventional Wisdom Widely accepted, for example Alexander Keyssar (2000, p. xxi) argues in The Right to Vote The expansion of su rage in the United States was generated by a number of key forces and factors... These include the dynamics of frontier settlement (as Frederick Jackson Turner pointed out a century ago). But the existence of a frontier clearly did not distinguish the United States from the other colonies of the Americas or indeed other societies such as Russia, South Africa or Australia in the 19th century. Every independent South American and Caribbean country, with the exception of Haiti, had a frontier in the 19th century, typically also inhabited by indigenous peoples. In these cases, however, there seems to be much less reason to associate frontier expansion with democracy or economic development. amilo Gracía-Jimeno (University of Pennsylvania)Econ 1340: World Economic History April 4, / 24

43 A Myth? Noting the absence of a literature on the Frontier thesis in Latin America Hennessy (1978, p. 13) reasons the absence of a Latin American frontier myth is easy to explain. Without democracy, there was no compulsion to elaborate a supportive ideology based on frontier experiences. Hennessy s general conclusion is that the thesis is irrelevant because Latin American frontiers have not provided fertile ground for democracy. The concentration of wealth and the absence of capital and of highly motivated pioneers e ectively blocked the growth of independent smallholders and a rural middle class (Hennessy, 1978, p. 129) The lack of a correlation between good outcomes and the frontier in Latin America raises the question of whether or not in general there is any connection between the frontier and economic and political development. Maybe the frontier was irrelevant? A myth? amilo Gracía-Jimeno (University of Pennsylvania)Econ 1340: World Economic History April 4, / 24

44 Allocating the Frontier Some of the mechanisms described in the case of the United States certainly seem plausible, it is just that they don t seem to have operated in Latin America. The key to understanding why comes from examining how frontier land was allocated. In the United States it was the 1862 Homestead Act, building on earlier legislation such as the Land Ordinance of 1785, which played a major role in governing who and on what terms had access to the frontier. In Latin America, on the other hand, only Costa Rica and Colombia passed and enforced legislation which resembled measures such as these. More generally, frontier land was allocated in a relatively inegalitarian pattern by existing elites, and property rights over frontier lands of settlers were in many cases weak for non-elites. Camilo Gracía-Jimeno (University of Pennsylvania)Econ 1340: World Economic History April 4, / 24

45 The Conditional Frontier Thesis The Latin American experience suggests to us not that the frontier is irrelevant, but rather that a more nuanced version of the Frontier thesis is required - conditional Frontier thesis. The consequences of the frontier are conditional on the initial political equilibrium when frontier expansion occurred. Although the opening up of a frontier might bring new opportunities for the establishment of equitable societies in ways that could promote democracy and economic growth, as Turner suggested, in relatively oligarchic countries the existence of an open frontier gave the ruling elite a new valuable instrument which they could manipulate to remain in power. They did this through the structure of land and laws, policies towards immigrants and clientelistic access to frontier lands. Camilo Gracía-Jimeno (University of Pennsylvania)Econ 1340: World Economic History April 4, / 24

46 Testing the The Conditional Frontier Thesis Long run economic growth We can test the conditional Frontier thesis by interacting the proportion of frontier land in 1850 with measures of initial institutions, speci cally constraints on the executive from the Polity dataset which is available for every independent country in the Americas in When GDP per-capita in 2007 is the dependent variable we nd that neither frontier land in 1850 nor constraints on the executive are themselves statistically signi cant, but their interaction is. The results imply that for countries with the lowest level of constraints on the executive (which is almost half our sample in 1850) long-run economic growth is lower the larger is the frontier. For higher levels of constraints, however, long-run growth is higher. These simple regressions are very consistent with the conditional Frontier thesis. Camilo Gracía-Jimeno (University of Pennsylvania)Econ 1340: World Economic History April 4, / 24

47 US Exceptionalism A different take: Comparative Development in the Americas Testing the Frontier Thesis Concluding Measuring the Frontier We collected three sources of information on the Frontier: Historical cartography georeferenced using GIS Current administrative divisions of American Countries Historical Accounts of Frontier expansion With these we were able to construct 3 alternative measures of the Frontier. García-Jimeno, Robinson Frontier

48 US Exceptionalism A different take: Comparative Development in the Americas Testing the Frontier Thesis Concluding Measuring the Frontier For the U.S. and Canada, very detailed cartographic information on population density c.1850, so we directly computed the share of land with population density below 2 people per sq. mile. For Central and South America, less precise information. Overlaying historical maps with information on settled and unsettled areas on current-day sub-national level maps allowed us to clasify each province/state as Frontier or non-frontier in Because some provinces were partially Frontier when overlaying the historical maps, we built two measures: Narrow and Wide. Narrow counts a given province as Frontier only if all of its area is covered, Wide counts it as Frontier if any of its area is covered. For South America Butland (1966) offers a Frontier map for the mid 19th century we also use. García-Jimeno, Robinson Frontier

49 US Exceptionalism A different take: Comparative Development in the Americas Testing the Frontier Thesis Concluding The Frontier c.1850 in North America García-Jimeno, Robinson Frontier

50 US Exceptionalism A different take: Comparative Development in the Americas Testing the Frontier Thesis Concluding The Frontier c.1850 in Central America García-Jimeno, Robinson Frontier

51 US Exceptionalism A different take: Comparative Development in the Americas Testing the Frontier Thesis Concluding The Frontier c.1850 in South America García-Jimeno, Robinson Frontier

52 Testing the The Conditional Frontier Thesis Democracy With respect to democracy, when we look at the average Polity Score from we again nd that once we add the interaction term, neither frontier nor constraints themselves are signi cant. In this case we do not nd that the frontier is ever bad for democracy, but rather its impact on democracy is greater the greater are constraints on the executive in These results suggest, again consistent with the conditional Frontier thesis, that the frontier on its own had no impact on democracy. Camilo Gracía-Jimeno (University of Pennsylvania)Econ 1340: World Economic History April 4, / 24

53 US Exceptionalism A different take: Comparative Development in the Americas Testing the Frontier Thesis Concluding The Frontier in the Americas García-Jimeno, Robinson Frontier

54 US Exceptionalism A different take: Comparative Development in the Americas Testing the Frontier Thesis Concluding Institutions in 1850 García-Jimeno, Robinson Frontier

55 US Exceptionalism A different take: Comparative Development in the Americas Testing the Frontier Thesis Concluding Descriptive Statistics García-Jimeno, Robinson Frontier

56 US Exceptionalism A different take: Comparative Development in the Americas Testing the Frontier Thesis Concluding Turner s scatterplots García-Jimeno, Robinson Frontier

57 US Exceptionalism A different take: Comparative Development in the Americas Testing the Frontier Thesis Concluding Turner s Scatterplots García-Jimeno, Robinson Frontier

58 US Exceptionalism A different take: Comparative Development in the Americas Testing the Frontier Thesis Concluding Turner s Scatterplots García-Jimeno, Robinson Frontier

59 US Exceptionalism A different take: Comparative Development in the Americas Testing the Frontier Thesis Concluding Regression Results García-Jimeno, Robinson Frontier

60 US Exceptionalism A different take: Comparative Development in the Americas Testing the Frontier Thesis Concluding Regression Results García-Jimeno, Robinson Frontier

61 Critical Junctures and Institutions The Conditional Frontier Thesis is another example of something we have seen a lot of in this course. The consequences of a critical juncture - here the fact that falling transportation costs and rising consumer demand suddenly make frontier land a valuable economic asset - depend on the initial institutional circumstances. When political institutions are initially extractive - low constraints on the executive - then elites allocate frontier land in such a way as to promote extractive economic institutions and perpetuate their power. When political institutions are inclusive - high constraints - then frontier land is allocated in a completely di erent way, people get access to it, an egalitarian frontier opens, and this further sustains both inclusive economic and political institutions - the virtuous circle. Camilo Gracía-Jimeno (University of Pennsylvania)Econ 1340: World Economic History April 4, / 24

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