lecture 5 institutions, culture, and growthcromer/courses/e210a_s15/lecture 5 slides... · lecture...
TRANSCRIPT
![Page 1: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/1.jpg)
LECTURE 5 Institutions, Culture, and Growth
February 25, 2015
Economics 210A Christina Romer Spring 2015 David Romer
![Page 2: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/2.jpg)
I. OVERVIEW
![Page 3: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/3.jpg)
A Fundamental Question: Why Isn’t the Whole World Developed?
• Industrialization spread rapidly to some areas.
• Technology is portable (non-rival).
• So are institutions.
![Page 4: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/4.jpg)
Three Broad Possibilities
• Direct effects of geography.
• Institutions.
• Culture.
• Other? (Human capital? “Policies” rather than institutions?)
![Page 5: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/5.jpg)
If the Answer Isn’t Geography, Ideally We’d Like to Dig Deeper: Where Do Variations in
Institutions or Culture Come from?
• Geography.
• Historical accident.
• Ideas.
• …
• And: Why do the differences persist?
![Page 6: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/6.jpg)
Today’s Papers
• AJR: Geography → Institutions → Development.
• Nunn: Geography (and historical accident?) → Slave trade → Institutions (and perhaps culture) → Development.
• Clark: Culture → Development.
![Page 7: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/7.jpg)
II. DARON ACEMOGLU, SIMON JOHNSON, AND JAMES ROBINSON
“THE COLONIAL ORIGINS OF COMPARATIVE DEVELOPMENT: AN EMPIRICAL INVESTIGATION”
![Page 8: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/8.jpg)
AJR’s Thesis
• Settler mortality affected colonialization strategy, which affected institutions.
• These institutional differences have persisted.
• Engerman and Sokoloff advance similar ideas; but they focus on conduciveness to slave agriculture rather than the disease environment.
![Page 9: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/9.jpg)
AJR’s Basic Empirical Strategy
• In a sample of former colonies, regress income per capital today on institutions today, instrumenting with settler mortality.
• “This identification strategy will be valid as long as … mortality rates of settlers between the seventeenth and nineteenth centuries have no effect on income today other than through their influence on institutional development” (AJR, p. 1383).
• No!! The key issue is whether settler mortality is correlated with determinants of income today other than institutions.
![Page 10: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/10.jpg)
AJR’s Qualitative Evidence
• Mortality influenced settlement patterns.
• Colonizers adopted very different strategies in different places: “settler colonies” vs. “extractive states.”
• Institutions had considerable persistence.
• Evaluation?
![Page 11: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/11.jpg)
OLS
From: AJR, “The Colonial Origins of Comparative Development”
![Page 12: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/12.jpg)
From: AJR, “The Colonial Origins of Comparative Development”
![Page 13: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/13.jpg)
Data on Potential Settler Mortality
• Mainly death rates of soldiers (not from battle).
• For Latin America, mainly based on death rates of bishops, adjusted to reflect higher death rates of soldiers.
• Deaths were largely from disease, especially malaria and yellow fever.
• AJR argue that the diseases had much smaller effects on local populations.
![Page 14: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/14.jpg)
IV – First Stage
From: AJR, “The Colonial Origins of Comparative Development”
![Page 15: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/15.jpg)
From: AJR, “The Colonial Origins of Comparative Development”
![Page 16: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/16.jpg)
Discussion
• Latitude and Africa dummy (vs. Americas) are insignificant (!).
• OLS vs. IV: Can measurement error – broadly defined – plausibly explain why the IV estimates are so much larger?
• If the measurement error is classical, 𝑏�𝑂𝑂𝑂 = 𝑉𝑋𝑉𝑋+ 𝑉𝑢
𝑏𝑇𝑇𝑇𝑇, where 𝑉𝑋 and 𝑉𝑢 are the variances of
the “true” X and of the measurement error.
• Implied economic importance from the IV estimate?
![Page 17: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/17.jpg)
Candidates for Omitted Variables Correlated with the Instrument
• Identity of the colonizer. • Legal origins. • Religion. • Weather. • Suitability for agriculture. • Modern disease environment. • Effects of the slave trade operating through culture
rather than institutions. • Human capital accumulation. • More?
![Page 18: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/18.jpg)
From: AJR, “The Colonial Origins of Comparative Development”
![Page 19: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/19.jpg)
From: AJR, “The Colonial Origins of Comparative Development”
![Page 20: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/20.jpg)
Other Issues
• Concerns abut the data: Albouy (2012 and others) vs. AJR (2012 and others).
• Are the intermediate steps (e.g., institutions in 1900 and at time of independence) strong enough?
![Page 21: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/21.jpg)
From: AJR, “The Colonial Origins of Comparative Development”
![Page 22: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/22.jpg)
Conclusion
![Page 23: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/23.jpg)
III. NATHAN NUNN
“THE LONG-TERM EFFECTS OF AFRICA’S SLAVE TRADES”
![Page 24: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/24.jpg)
Nunn’s Thesis
• The legacy of the slave trade adversely affects African economic development today.
![Page 25: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/25.jpg)
Data Construction
• Shipping data provide estimates of number of slaves shipped from each coastal country of Africa.
• Some samples show ethnic composition of slaves (but usually not where they were shipped from).
• Assumes that “slaves shipped from a port within a country are either from that country or from countries directly to the interior.”
![Page 26: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/26.jpg)
From: Nunn, “The Long-Term Effects of Africa’s Slave Trades”
![Page 27: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/27.jpg)
Possible Sources of Measurement Error
• Misassignment from his imputation procedure.
• Underestimation of slaves from the interior (because of higher mortality rates).
• Errors arising from small numbers of samples showing ethnicities.
![Page 28: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/28.jpg)
From: Nunn, “The Long-Term Effects of Africa’s Slave Trades”
[…]
![Page 29: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/29.jpg)
From: Nunn, “The Long-Term Effects of Africa’s Slave Trades”
![Page 30: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/30.jpg)
From: Nunn, “The Long-Term Effects of Africa’s Slave Trades”
[…]
![Page 31: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/31.jpg)
Map from: Greatlakesvoice.com
Some Influential Observations in Figure III
Low slave trade, high income today
Seychelles
Mauritius
High slave trade, low income today
![Page 32: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/32.jpg)
Possible Biases?
• Perhaps less developed areas were more affected by the slave trade.
• Perhaps more developed areas were more affected by the slave trade, and the greater development harmed them in the long run for reasons unrelated to the slave trade. (AJR, “Reversal of Fortune” QJE, 2002.)
• Non-classical measurement error?
• More?
![Page 33: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/33.jpg)
Instruments • “The sailing distance from the point on the coast that is
closest to the country’s centroid to the closest major market of the Atlantic slave trade.”
• “The sailing distance from the point on the coast that is closest to the country’s centroid to the closest of the two major slave destinations of the Indian Ocean slave trade.”
• “The overland distance from a country’s centroid to the closest port of export for the trans-Saharan slave trade.”
• “The overland distance from a country’s centroid to the closest port of export for the Red Sea slave trade.”
![Page 34: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/34.jpg)
From: Nunn, “The Long-Term Effects of Africa’s Slave Trades”
![Page 35: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/35.jpg)
From: Nunn, “The Long-Term Effects of Africa’s Slave Trades”
[…]
![Page 36: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/36.jpg)
From: Nunn, “The Long-Term Effects of Africa’s Slave Trades”
![Page 37: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/37.jpg)
Qualitative Evidence and Mechanisms
• Slave trade lasted for about 500 years; formal colonial rule for about 75.
• Impact on ethnic fractionalization.
• Impact on state development.
• Impact on trust (Nunn and Wantchekon, AER, 2011).
![Page 38: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/38.jpg)
From: Nunn, “The Long-Term Effects of Africa’s Slave Trades”
![Page 39: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/39.jpg)
From: Nunn, “The Long-Term Effects of Africa’s Slave Trades”
![Page 40: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/40.jpg)
From: Nunn, “The Long-Term Effects of Africa’s Slave Trades”
![Page 41: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/41.jpg)
Conclusion
![Page 42: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/42.jpg)
IV. GREGORY CLARK
“WHY ISN’T THE WHOLE WORLD DEVELOPED? LESSONS FROM THE COTTON MILLS”
![Page 43: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/43.jpg)
Overview of Clark
• Uses cotton textiles as a case study.
• Attempts to show that there were large differences in labor efficiency across countries.
• Investigates the possible factors that could explain this.
• Concludes that the source of the difference was local culture.
![Page 44: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/44.jpg)
Textiles as a Case Study
• Strengths
• Major industry, plentiful data, common across countries.
• Weaknesses
• Might not be representative, data come from countries at different stages of industrialization.
![Page 45: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/45.jpg)
Two Approaches to Deducing Labor Efficiency
• Approach 1: Look at relative costs and trade.
• Approach 2: Look directly at staffing levels per machine.
![Page 46: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/46.jpg)
A. Approach 1 to Showing that Labor Was More Efficient in Britain
• Argue that higher wages would have put Britain at a huge competitive disadvantage if British workers weren’t more efficient.
![Page 47: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/47.jpg)
From: Clark, “Why Isn’t the Whole World Developed?”
![Page 48: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/48.jpg)
From: Clark, “Why Isn’t the Whole World Developed?”
![Page 49: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/49.jpg)
Do you find this argument compelling?
![Page 50: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/50.jpg)
B. Approach 2 to Showing that Labor Was More Efficient in Britain
• Look at number of machines a worker tended in various countries as a measure of efficiency.
![Page 51: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/51.jpg)
Ring Spinning (1920s)
![Page 52: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/52.jpg)
From: Clark, “Why Isn’t the Whole World Developed?”
![Page 53: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/53.jpg)
Power Loom (1890)
![Page 54: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/54.jpg)
Textile Mill
![Page 55: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/55.jpg)
From: Clark, “Why Isn’t the Whole World Developed?”
![Page 56: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/56.jpg)
From: Clark, “Why Isn’t the Whole World Developed?”
![Page 57: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/57.jpg)
C. What Might Explain the Different Staffing Levels We Observe?
Explanations Not Related to Labor Itself
![Page 58: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/58.jpg)
Can the different staffing levels be explained by capital-labor substitution?
• Only makes sense to use more labor if it allowed foreign mills to save on other inputs, such as capital.
• Yet, we see higher staffing levels in areas where substituting labor for capital wasn’t a possibility (doffing).
![Page 59: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/59.jpg)
Doffing (1911)
![Page 60: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/60.jpg)
• N
• Low-wage countries were not getting great utilization
of their capital except through running longer hours.
From: Clark, “Why Isn’t the Whole World Developed?”
![Page 61: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/61.jpg)
Can the different staffing levels be explained by raw material-labor substitution?
• Perhaps higher staffing levels made it possible to use lower-grade (cheaper) cotton.
• Yet, only a few high-staffing-level countries used low-grade cotton.
![Page 62: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/62.jpg)
• Japan, India, and China do not use poorer cotton in finer (higher) counts of yarn, yet they had higher staffing levels in those as well.
From: Clark, “Why Isn’t the Whole World Developed?”
![Page 63: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/63.jpg)
Can the different staffing levels be explained by different technologies?
• Most mills were made of imported technology.
• Installed by British engineers.
• Often used British managers and skilled workers to train local workers.
• Later development abroad and fast growth likely implied technology was newer, not older.
![Page 64: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/64.jpg)
D. What Might Explain the Different Staffing Levels We Observe?
Explanations Focusing on Labor
• Are there characteristics of labor that made workers less productive outside of Britain?
![Page 65: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/65.jpg)
Could lower labor efficiency be explained by less experience?
• Wage profiles were not steeply upward-sloping.
• How does Clark measure experience?
• Thinks it is lower where textile industry is growing faster.
![Page 66: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/66.jpg)
From: Clark, “Why Isn’t the Whole World Developed?”
![Page 67: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/67.jpg)
Could lower labor efficiency be explained by lower inherent labor quality?
• Poor nutrition could make workers small or less strong. Could that matter?
• Clark’s response: small is fine and firms could feed workers.
• Lack of correlation between immigrants’ wages in America and efficiency in their home country. What does this imply?
![Page 68: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/68.jpg)
From: Clark, “Why Isn’t the Whole World Developed?”
![Page 69: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/69.jpg)
Clark’s Preferred Explanation: Local Effects (Culture)
• Workers refused to tend more machines in some countries even though they could.
• Cited lack of jobs for others:
![Page 70: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/70.jpg)
From: Clark, “Why Isn’t the Whole World Developed?”
![Page 71: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/71.jpg)
Do you agree with Clark’s conclusion?
• Argument by elimination may be problematic.
• Even if no one factor explains observed differences in staffing levels, perhaps together they may explain a lot.
• Does it make sense that culture didn’t stay with workers when they moved?
![Page 72: LECTURE 5 Institutions, Culture, and Growthcromer/Courses/e210a_s15/Lecture 5 Slides... · LECTURE 5 Institutions, Culture, and Growth ... From: AJR, “The Colonial Origins of Comparative](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b54fe9c7f8b9a27658d92fe/html5/thumbnails/72.jpg)
Possible Implications If Clark Is Right
• Major source of underdevelopment may have been inefficiency of labor rather than inability to absorb modern technology.
• Importance of local culture could explain why people moved, rather than why capital moved.
• Wages may not be the best guide to labor costs.
• Growth may reflect labor intensification as much as technological progress.