Do European settlers account for 40% of all development ever outside Europe?

A new paper from Bill Easterly and Ross Levine:

Although a large literature argues that European settlement outside of Europe shaped institutional, educational, technological, cultural, and economic outcomes, researchers have been unable to directly assess these predictions because of an absence of data on colonial European settlement.
…we construct a new database on the European share of the population during the early stages of colonization and examine its association with the level of economic development today.
We find: (1) a strong and uniformly positive relationship between colonial European settlement and development, (2) a stronger relationship between colonial European settlement and economic development today than between development today and the proportion of the population of European descent today; and (3) no evidence that the positive relationship between colonial European settlement and economic development diminishes or becomes negative at very low levels of colonial European settlement, contradicting a large literature that focuses on the enduring adverse effects of small European settlements.
Our findings are most consistent with human capital playing a central role in the way that colonial European settlement affects development today.

The provocative post title comes from a tweet of Bill’s. He likes to provoke.

I think the wrong way to interpret their finding is that colonialism causes development.

I think the right way to think about it is to remember that modern economic growth is a product of ideas, skills, and the organization of society and firms. If you don’t have much of that stuff and add people that do–even colonists–growth is more likely.

What’s amazing is that there are other ways to get ideas and skills and social organization than colonialism. You would think, by now, these other paths would have swamped out the effects of early settlement. What I did not see in my quick reading of the paper is a sense of proportion–is the statistically significant result substantive? Less lazy readers than me: please chime in.

3 thoughts on “Do European settlers account for 40% of all development ever outside Europe?

  1. So you’re saying that colonialism causes development, but there are other ways to cause development. It’s not about wrong way vs right way, just alternative technologies for devt. And today, perhaps, the internet or MOOC’s are a better technology than Belgian Congo-style colonialism but perhaps not better than North Alberta colonialism.

    The distinction is important for tracing past causation.

  2. If areas where Europeans did not settle are indeed underperforming, what do we make of high performers that were not colonized by the Europeans, i.e. South Korea?

  3. @FA

    The “Asian Tigers” were all colonies, actually. Hong Kong and Singapore were of course British, while Taiwan and South Korea were Japanese colonies. The methods used were similar enough, given that the Japanese explicitly modeled their colonization after what they had observed Europeans doing elsewhere. Namely, investments in infrastructure, agriculture, transportation, mass education and state institutions designed to raise the standard of living to something approaching that seen in the west. It was sort of a prestige project for them. I’ll close with the obligatory note that acknowledging such undeniable “hardware” investment is not to suggest there were not abuses and discrimination in the system. There were many, of course…