Perspectives from New Institutional Economics
Edited by Claude Ménard
Chapter 11: Inequality, institution and differential paths of growth among New World economies
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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