VOL.91 NO.5 ACEMOGLU ET AL:THE COLONIAL ORIGINS OF DEVELOPMENT 1379 TABLE 2-OLS REGRESSION Dependent variable is log GDP per capita in195 8 8 8 8 047 0.06) 8的 85 8 037 (051 Asia dummy Africa dummy (0,2 "Other"continent dummy 020 06 T1983 e e prot ged ov Sachs and coauthors,have argued for a direct outpu per worke from the correlation between distance from the eo Overall.the results in Table 2 show a strong ure in using the are a this relationship as causal.First,rich of the and may be be this Latitude itself is also significant and reverse causality problem,there are many omi ha the sigf I by the prev us studies ed de erminants ncome nat wi Africa.Asia and other continents.with Ame s of institutions onstr cted e ica as the omitted group.Altho ugh protectio and the analysts may y have ha Ia natura an ell as g bet her quantitatively The Africa dummy ir that the column(6)in tes that in our sample Afr titutions variable is measure he onsid tice creates institutions into account.Finally,in columns(7) attenuation and may bias the OLs estimates
VOL. 91 NO. 5 ACEMOGLU ET AL.: THE COLONIAL ORIGINS OF DEVELOPMENT 1379 TABLE 2-OLS REGRESSIONS Whole Base Whole Whole Base Base Whole Base world sample world world sample sample world sample (1) (2) (3) (4) (5) (6) (7) (8) Dependent variable is log output per Dependent variable is log GDP per capita in 1995 worker in 1988 Average protection 0.54 0.52 0.47 0.43 0.47 0.41 0.45 0.46 against expropriation (0.04) (0.06) (0.06) (0.05) (0.06) (0.06) (0.04) (0.06) risk, 1985-1995 Latitude 0.89 0.37 1.60 0.92 (0.49) (0.51) (0.70) (0.63) Asia dummy -0.62 -0.60 (0.19) (0.23) Africa dummy -1.00 -0.90 (0.15) (0.17) "Other" continent dummy -0.25 -0.04 (0.20) (0.32) R2 0.62 0.54 0.63 0.73 0.56 0.69 0.55 0.49 Number of observations 110 64 110 110 64 64 108 61 Notes: Dependent variable: columns (1)-(6), log GDP per capita (PPP basis) in 1995, current prices (from the World Bank's World Development Indicators 1999); columns (7)-(8), log output per worker in 1988 from Hall and Jones (1999). Average protection against expropriation risk is measured on a scale from 0 to 10, where a higher score means more protection against expropriation, averaged over 1985 to 1995, from Political Risk Services. Standard errors are in parentheses. In regressions with continent dummies, the dummy for America is omitted. See Appendix Table Al for more detailed variable definitions and sources. Of the countries in our base sample, Hall and Jones do not report output per worker in the Bahamas, Ethiopia, and Vietnam. Sachs and coauthors, have argued for a direct effect of climate on performance, and Gallup et al. (1998) and Hall and Jones (1999) document the correlation between distance from the equa- tor and economic performance. To control for this, in columns (3)-(6), we add latitude as a regressor (we follow the literature in using the absolute value measure of latitude, i.e., distance from the equator, scaled between 0 and 1). This changes the coefficient of the index of institu- tions little. Latitude itself is also significant and has the sign found by the previous studies. In columns (4) and (6), we also add dummies for Africa, Asia, and other continents, with Amer- ica as the omitted group. Although protection against expropriation risk remains significant, the continent dummies are also statistically and quantitatively significant. The Africa dummy in column (6) indicates that in our sample African countries are 90 log points (approximately 145 percent) poorer even after taking the effect of institutions into account. Finally, in columns (7) and (8), we repeat our basic regressions using the log of output per worker from Hall and Jones (1999), with very similar results. Overall, the results in Table 2 show a strong correlation between institutions and economic performance. Nevertheless, there are a number of important reasons for not interpreting this relationship as causal. First, rich economies may be able to afford, or perhaps prefer, better institutions. Arguably more important than this reverse causality problem, there are many omit- ted determinants of income differences that will naturally be correlated with institutions. Finally, the measures of institutions are constructed ex post, and the analysts may have had a natural bias in seeing better institutions in richer places. As well as these problems introducing positive bias in the OLS estimates, the fact that the institutions variable is measured with consider- able error and corresponds poorly to the "cluster of institutions" that matter in practice creates attenuation and may bias the OLS estimates This content downloaded from 202.114.238.230 on Mon, 28 Oct 2024 05:17:22 UTC All use subject to /s/about.jstor.org/terms
1380 THE AMERICAN ECONOMIC REVIEW DECEMBER 200 10 SSTM PER DO 8 BGD NGA TZA 6 Q Average E ropriation Risk1985 FIGURE 2.OLS RELATIONSHIP BETWEEN EXPROPRIATION RISK AND INCOME downwards.All of these problems could be Both malaria and yellow fever are transmit ment for institutions. we observe, out have no direct effect on perfor while the main of w fever is Aede. end to live an hahitatic ver vector is a plausible instrument. In places where the malaria vector is present III.Mortality of Early Settlers such as the。 wes Arrican savanna or reMiry In this subsection.we give a brief overview of the were muc lower (se d th um falcipo duction above).Curtin(1998 pp.7-8)describes of European mortality in the colonies.In the this as follows: tropics, these two dis 80 Children in West africa would be in tinal diseases accounted for another 1s ith mal enth if they ved be a and y rond the Europe because the major causes of death in rith then the Europe-tube re ra e pla urtin
1380 THE AMERICAN ECONOMIC REVIEW DECEMBER 2001 10 HKG S CAN r) | ~~~~~~~~~~~~MLTBHS H GM PER DOMTW) N- 8 SLV BO[GU IDN . ~~~HTI SDN 'MM TGO RD 7 A l NEBRGD NGA 0~~~~~~~~ a) EhE TZA m~ 6m 0 4' 4 6 8 10 Average Expropriation Risk 1985-95 FIGURE 2. OLS RELATIONSHIP BETWEEN EXPROPRIATION RISK AND INCOME downwards. All of these problems could be solved if we had an instrument for institutions. Such an instrument must be an important factor in accounting for the institutional variation that we observe, but have no direct effect on perfor- mance. Our discussion in Section I suggests that settler mortality during the time of colonization is a plausible instrument. III. Mortality of Early Settlers A. Sources of European Mortality in the Colonies In this subsection, we give a brief overview of the sources of mortality facing potential set- tlers. Malaria (particularly Plasmodium falcipo- rum) and yellow fever were the major sources of European mortality in the colonies. In the tropics, these two diseases accounted for 80 percent of European deaths, while gastrointes- tinal diseases accounted for another 15 percent (Curtin, 1989 p. 30). Throughout the nineteenth century, areas without malaria and yellow fever, such as New Zealand, were more healthy than Europe because the major causes of death in Europe-tuberculosis, pneumonia, and small- pox-were rare in these places (Curtin, 1989 p. 13). Both malaria and yellow fever are transmit- ted by mosquito vectors. In the case of malaria, the main transmitter is the Anopheles gambiae complex and the mosquito Anopheles funestus, while the main carrier of yellow fever is Aedes aegypti. Both malaria and yellow fever vectors tend to live close to human habitation. In places where the malaria vector is present, such as the West African savanna or forest, an individual can get as many as several hundred infectious mosquito bites a year. For a person without immunity, malaria (particularly Plas- modium falciporum) is often fatal, so Europe- ans in Africa, India, or the Caribbean faced very high death rates. In contrast, death rates for the adult local population were much lower (see Curtin [1964] and the discussion in our intro- duction above). Curtin (1998 pp. 7-8) describes this as follows: Children in West Africa . would be in- fected with malaria parasites shortly after birth and were frequently reinfected after- wards; if they lived beyond the age of about five, they acquired an apparent im- munity. The parasite remained with them, normally in the liver, but clinical symp- toms were rare so long as they continued to be infected with the same species of P. falciporum. This content downloaded from 202.114.238.230 on Mon, 28 Oct 2024 05:17:22 UTC All use subject to /s/about.jstor.org/terms