Table of Contents

Institutions, Contracts and Organizations

Institutions, Contracts and Organizations

Perspectives from New Institutional Economics

Edited by Claude Ménard

This outstanding book presents new original contributions from some of the world’s leading economists including Ronald Coase, Douglass C. North, Masahiko Aoki, Oliver E. Williamson and Harold Demsetz. It demonstrates the extent and depth of the New Institutional Economics research programme which is having a worldwide impact on the economics profession.

Chapter 11: Inequality, institution and differential paths of growth among New World economies

Stanley L. Engerman, Stephen H. Haber and Kenneth L. Sokoloff

Subjects: economics and finance, industrial organisation, institutional economics

Extract

108 Sources of growth: technology, natural endowments or institutions? 11. Inequality, institutions and differential paths of growth among New World economies Stanley L. Engerman, Stephen H. Haber and Kenneth L. Sokoloff INTRODUCTION The differences in levels of per capita income among the New World economies established by the Europeans have increased sharply over the last few centuries. From a situation in which differences in income levels may have been quite small – indeed where the per capita incomes in parts of Latin America exceeded those in the regions that were to compose the United States and Canada – the gap has grown so that the last two nations have a per capita income much higher than that of Latin America overall. This is especially puzzling because the areas that were first settled, and the choices of the first Europeans to colonize parts of the Americas, were those that fell behind. Conversely, those that were established by Europeans who came late and had to settle for areas viewed less favorably in terms of prospects, have proved more successful in economic terms over the long run. The explanations for these differentials in growth rates and income levels provided by economists and historians have run the gamut, from an emphasis on strictly economic factors to mainly cultural and religious factors. In recent years, the critical role of institutions has been argued for by economists, but there has been relatively limited progress in analysing where they came from. This is unfortunate in that the sources of...

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