The Effect of Geography on Institutions
Institutions are important but where do institutions come from? Why do some countries have better institutions than others? Geography may play an indirect role in growth, through institutions, as well as a direct role.
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I'm curious why sugar is consider a factor endowment. It was a nonnative crop. (Sugarcane is native to Asia, and until its widespread cultivation in tropical regions of the New World most sugar was produced in India.) Isn't "climate suitable for growing sugar" the factor endowment?
To what degree do you think the institutions and culture of the colonizing countries mattered? Had Spain colonized New England, do you think the institutions established there would have generally been the same?
Excellent exposition. Spanish, with Castillian matrix, produced extractive institutions in Central and South America. The purpose was to feed a military and increasingly bureaucratic state that, in the sixteenth and even part of the seventeenth century, dominated Europe and ruled vast parts of America. Other countries belonging to the kingdom of Spain, as Catalonia, previously had flourished through trade in the Mediterranean area. Later on, Catalans were prohibited by Castillians (the Spanish dominant political elite) from trading with America. The expoliation worsened in 1714, with the entry of Bourbon dinasty in Spain (Phillip V). Now, in Spain the extractive institutions go on and can be studied in a state level. Regions as Extremadura and Andalucía are heavily subsidised by Catalonia and Balearic Isles. The possible next step of Catalan people might be the secession (a natural right) from Spanish State. However the uncertainties and drawbacks of the situation, the fulfillment of the natural right to secession from a major Leviathan could be the seed for a reinforced prosperity and renaissence of liberty.
On the other hand, the United States have possibly moved a long way from the liberty fundamentals established by Thomas Jefferson and other Founding Fathers. Although very wealthy by many standards, the military machine means a heavy toll on people and an erosion of the productive capacity. Up to which point the original inclusive institutions have turned to an exclusive ones? Up to which point are the United States today the former land of freedom, where through personal and honest effort everybody could progress upward in society?