"The Colonial Origins of Comparative Development" is a 2001 article written by Daron Acemoglu, Simon Johnson, and James A. Robinson and published in American Economic Review.
[1] The theory proposed in the article is that Europeans only set up growth-inducing institutions in areas where the disease environment was favourable so that they could settle.
In areas with unfavourable disease environments to Europeans, such as central Africa, they instead set up extractive institutions which persist to the present day and explain much of the variation in income across countries.
The first question the authors ask is simple: "What are the fundamental causes of the large differences in income per capita across countries?".
In the scenario where colonial institutions remain, this would allow pre-existing wealth-generating assets to continue to operate in a similar manner.
This was the case of Australia in the 1840s, where most settlers were former criminals, whereas landowners were mostly former jailors, which led to pressure to implement constitutional changes.
When deciding where to send criminals, several locations were rejected due to high mortality rates and Australia was chosen as the final destination for convicts.
The mortality rate was also one of the significant factors influencing the development of new settlements – a higher probability of survival was more attractive to potential new colonists.
The authors exploit these three premises as a base to use the mortality of European colonists as an instrument for present institutions in those countries.
In one sample of 75 former European colonies, a strongly negative relationship was found between current GDP per capita and mortality rate per thousand of former settlers in these countries (from the seventeenth to the nineteenth century).
There may be a tendency to connect the lethality of settlers to the occurrence of illnesses (which is not wrong), however, it is important to bear in mind that the difference in immune strength between colonists and local inhabitants, who had been exposed to local diseases for centuries, differ, and thus it is very unlikely that economic performance of former European colonies is determined by disease occurrence.
Another important observation is that estimates barely changed when controls for other variables such as main colonizer, religion, legal origin or culture were included.
[7] This is due to the fact that troops in wartime took fewer illness precautions and lacked access to good drinking water.
Similar to soldiers in peacetime, civilians who have access to good drinking water and sewage disposal can reduce the risk of contracting the disease and therefore lower mortality rates.
The authors responded that this was not an issue since epidemic events were originally flagged in the article and that it should be included in the study if it affected the perception of European settlers.
For example, data used in determining the mortality rate of soldiers in West Africa were primarily obtained from Curtin which is consistent with other sources from the Institute of Actuaries (life insurance literature), Bruce-Chwatt, and Kuczynski.
A similar case is presented for Central Africa where data primarily sourced from Curtin is consistent with findings from Hunter, Sprague, and Kiple.
In addition, the authors also ran a scenario that includes all of Albouy’s suggestions; however, it resulted in inaccurate confidence sets.
The twenty countries are spread across Africa, the Caribbean, Asia, and Australia, given the unreliable information on European mortality rates from those locations.
In addition, the authors also argued against Albouy’s criticism that military campaigns, where European soldiers are stationed in different geographic locations, pushed mortality rates above what they would be in peacetime.
The authors also state that major wars were removed from the dataset due to an increase in mortality rates that would not have otherwise occurred naturally.