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The persistence of (subnational) fortune : geography, agglomeration, and institutions in the new world

Author:	Maloney, William F.; Caicedo, Felipe Valencia;	Collection Title:	Policy Research working paper ; no. WPS 6187Paper is funded by the Knowledge for Change Program (KCP)
Country:	World;	Date Stored:	2012/09/04
Document Date:	2012/09/01	Document Type:	Policy Research Working Paper
Language:	English	Region:	The World Region
Report Number:	WPS6187	SubTopics:	Transport Economics Policy & Planning; Economic Theory & Research; Inequality; Population Policies; E-Business
Volume No:	1 of 1

Summary: Using subnational historical data, this paper establishes the within country persistence of economic activity in the New World over the last half millennium. The paper constructs a data set incorporating measures of pre-colonial population density, new measures of present regional per capita income and population, and a comprehensive set of locational fundamentals. These fundamentals are shown to have explanatory power: native populations throughout the hemisphere were found in more livable and productive places. It is then shown that high pre-colonial density areas tend to be dense today: population agglomerations persist. The data and historical evidence suggest this is due partly to locational fundamentals, but also to classic agglomeration effects: colonialists established settlements near existing native populations for reasons of labor, trade, knowledge and defense. Further, high density (historically prosperous) areas also tend to have higher incomes today, and largely due to agglomeration effects: fortune persists for the United States and most of Latin America. Finally extractive institutions, in this case, slavery, reduce persistence even if they do not overwhelm other forces in its favor.


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