Daron Acemoglu: evaluation

Transcript context

…As you know, there’s a famous paper by Comin, Easterly, and Gong showing there’s a reasonably high correlation between per capita income in AD 1500 and the current day, especially once you account for the movement of settlers. Is that because the quality of institutions is so stable over time, over more than 500 years? Isn’t that better explained by having the quality of human capital be more stable over time? That seems more plausible. Well, I think it’s a complex picture, actually. One of the papers that I wrote with James Robinson and Simon Johnson, which we entitled “Reversal of Fortune,” is exactly on that point. The raw fact is that, if you look at which are the places that are more prosperous in 1500, those turn out to be relatively less prosperous today. It’s not to say that they became less rich today. Every place in the world became much richer because of industrialization, because of much better technologies, trade and all of that. But relatively speaking, it was places that were empty, without any urbanization, without much established road networks or agricultural surplus, such as Chile, Argentina, US, Canada — relative to the places that I mentioned a moment ago: Bolivia, Peru, Ecuador, Mexico, India, Pakistan — that actually became richer. So, that reversal of fortune is a prima facie evidence against a purely geographic explanation. Now, what else could explain it? Well, essentially there are two broad categories. The details, of course, within those categories matter, but there are two broad categories. One is that it’s the institutions, as I’ve tried to explain. And second, it’s culture. Perhaps Europeans brought their culture into some places or messed up the culture in some other places. And the human capital is somewhere in between because human capital is an institutional feature, meaning that it really depends on the educational investments, but it also, of course, has a cultural element. So a lot of the qualitative and the quantitative research that we have done puts much more emphasis and finds more support for the institutional interpretation. For example, if you take human capital, it wasn’t that Europeans brought human capital to the places such as the US or Argentina or Chile. Actually, the Europeans who were more educated were the ones who went to places such as the Inca Empire or the Aztec Empire. But they brought ideas. The Declaration of Independence was brought over by English and other European settlers. And that was a powerful intellectual validation.…

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