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Understanding Poverty$
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Abhijit Vinayak Banerjee, Roland Bénabou, and Dilip Mookherjee

Print publication date: 2006

Print ISBN-13: 9780195305197

Published to Oxford Scholarship Online: September 2006

DOI: 10.1093/0195305191.001.0001

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Colonialism, Inequality, and Long-Run Paths of Development

Colonialism, Inequality, and Long-Run Paths of Development

(p.37) 3 Colonialism, Inequality, and Long-Run Paths of Development
Understanding Poverty

Stanley L. Engerman

Kenneth L. Sokoloff

Oxford University Press

This essay explores the hypothesis that extreme differences in inequality across European colonies in the Americas gave rise to systematic differences in the ways institutions evolved, and in turn, on the paths of development. European colonization altered the composition of the populations in the colonized societies. Because colonization generally meant implanting communities that were greatly advantaged over natives in terms of human capital and legal status, and because the trajectories of institutional development were sensitive to the incidence of extreme inequality that often followed, European colonial activity had long, lingering effects. Colonies in the Americas with extreme inequality, compared with those with relative equality, were systematically more likely to evolve institutions that restricted access to economic opportunities and to generate lower rates of public investment in schools and other infrastructure considered conducive to growth. These patterns of institutional development, which tend to persist over time in economic performance, may help explain why many societies that began with extreme inequality continue to suffer from the same condition.

Keywords:   European colonization, colonies, Americas, economic development, suffrage, education

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