The Institutional and Economic Legacy of Democratic Colonizers

Scholars agree that colonialism was important for current differences in political regime types and economic well-being. How colonialism shaped country trajectories, however, remains controversial. Most researchers emphasize the geography and the indigenous societies of the colonies. Others instead stress that the colonizers were important. Yet this research struggles with imprecise measures, disregards that the colonizers effect might have varied across colonies, and is limited by the study of few cases. I therefore directly measure a colonizer’s political institutions and perform a quantitative analysis of a global sample of former colonies. I test if democratic colonizer institutions affected democracy and economic well-being today, and if precolonial state development and European settlements conditioned the effect. I find that countries with more democratic colonizers are more democratic, but not wealthier today. Democratic colonizers were not more beneficial if the indigenous state was weak before colonialism or if many European settled in the colony. Please do not circulate without the author’s permission. 1 I am grateful to Sara G. Arteagoitia, Alexandra Chinchilla, Alfredo Gonzalez, James Robinson, Dan Slater and Ji Xue for their comments on earlier versions of this paper. 2 Scholars agree that current differences in political regime types and economic well-being are the result of history: long historical processes and events influenced why some countries became democratic and wealthy, while others remained autocratic and poor (Nunn 2009). They also concur that the most important event was Western colonialism (Nunn 2014). How colonialism shaped country trajectories, however, remains controversial. Most researchers emphasize that what mattered for colonial rule were the conditions in the colonies, such as differences in climate, geography, and factor endowments. Other scholars instead stress that the characteristics of the colonizers were important for colonial rule. They argue that colonizers brought their institutions with them, and that differences in the political institutions across colonizers and time, and the duration of colonial rule exert legacies until today. Several shortcomings, however, afflict previous studies on the role of the colonizers in shaping the trajectories of their colonies. First, the quantitative studies use imprecise measures to capture the colonizers’ political institutions. The measures, such as a variable indicating the colonial power of a country, neglect crucial variation in political institutions. In turn, they risk being a proxy for other factors and thereby make empirical associations spurious. Second, the quantitative studies do not consider that the effect of the colonizer’s political institutions on current outcomes may vary across colonies. They treat colony and colonizer characteristics as separate explanations, instead of treating them as interrelated explanations. Third, the qualitative analyses which employ more precise measures and explore heterogeneous effects of colonizer institutions are limited by their scope. They explore few cases and few alternative explanations, which raises concerns that their explanations do not generalize to colonies overall. This paper revisits the question to which extent differences in the colonizers’ domestic political institutions explain variation in the current political institutions and economic well-being of former colonies. In doing so, I suggest remedies for the issues afflicting previous research. 3 First, I directly and precisely measure a colonizer’s political institutions. The measure captures variation in political institutions both between colonizers and within them over time. Second, I empirically investigate if the effect of colonizer institutions is conditioned by other characteristics of the colonies and the colonizers. I thereby explore if the current explanations are not separate, but intertwined. Third, I perform a quantitative analysis of a large sample of former European overseas colonies, thus tackling concerns of a limited scope in existing research. My interventions in the existing literature motivate several hypotheses. I hypothesize that former colonies are more democratic and wealthy today if they had colonizers with more democratic domestic institutions. The former colonies are more democratic because the colonizers transferred, at least partially, their own institutions to the colonies. And the former colonies should be wealthier because the differences in institutions affected the countries’ economic development. I further hypothesize that the effect of colonizer political institutions depends on characteristics of the colonies: the effect of democratic institutions should be stronger for countries with less developed pre-colonial states and stronger for countries which had more European settlers during colonialism. In the following section, I motivate my analysis with a discussion of the existing literature on the effects of colonial rule and present my argument. In the third section, I detail the measures for my variables of interest. In the fourth and fifth section, I investigate the empirical association between colonizer institutions, current political regime types, and economic well-being. I test the robustness of the findings by controlling for numerous alternative explanations. In the sixth and seventh section, I explore whether the colonizer institutions have diverging effects across former colonies. Specifically, I investigate whether the effect varies depending on the existence of precolonial state and the number of European settlers during colonialism. In the final section, I discuss the findings and suggest avenues for future research. 4 Colonial rule and its effect on current democracy and income levels Many scholars have turned to exploring how current differences in political regime types and economic well-being around the globe are the result of distant historical events and processes (Nunn 2009). They have identified European colonialism as particularly important (Nunn 2014). Researchers, however, disagree on how colonialism brought about contemporary differences. Most researchers have investigated how the conditions in the colonies affected differences in colonial rule. Some of them have emphasized variation in climate or geography. Acemoglu et al. (2001), for example, use the disease environment for European settlers to explain contemporary differences in economic institutions and thereby income levels. And Engerman and Sokoloff (1997; 2002; 2011) connect the endowment with agricultural resources, such as the ability to grow wheat and sugarcane, to contemporary political institutions and income levels through economic inequality during colonialism. Other work has focused on differences in colonized societies. Acemoglu et al. (2002), for instance, argue that wealthier pre-colonial societies incentivized the colonial powers to adopt extractive political and economic institutions, which made the societies relatively poorer over time. Other researchers have instead focused on characteristics of the colonizers. A first group argues that the colonizers brought their institutions with them and thereby shaped colonial rule. Hariri (2012), for example, argues that the European colonizers made their colonies more democratic by bringing their political institutions and ideas with them. Olsson (2009) hypothesizes that countries colonized longer are more democratic today because the transfer of European institutions was more expansive. Feyrer and Sacerdote (2009) contend that longer colonial rule raised economic well-being because the transfer of growth-promoting political institutions was more thorough.