The Role of Institutions

Institutionssocial organizations relatively better

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Unformatted text preview: The countries that were rich in 1500 are no longer rich now and vice versa (urbanization measures richness) The farther along urbanization axis, the richer you should be, but the graph shows a negative trend When did this reversal happen? Around 1820, there is a reversal of fortune, where countries that were poor prospered at a ridiculously fast rate while the rich countries stagnated. Reversals of fortune: Gains in the growing societies not always equally shared (eg. Native americans) Geography hypothesis? Simple version: geographic location is responsible for economic trajectory ! but there is no change in geography Sophisticated version: geographic charectiristics that were good in 1500 are now harmful ! no evidence to support this view; reversal related to industrialization Example: St. domingue: “the eden of the western world’ in 1790 Life was amazing etc. This is currently Haiti st. domingue was a slave- holding colony so the riches were held by French planters Today it is the poorest country in the western hemisphere (78% live un...
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