For all the attention garnered by the impressive quantitative studies documenting the importance of institutions for understanding contemporary economic performance,<sup>22</sup> by the early 2000s the prevailing policy discourse was recognizing that institutions themselves clearly had not arrived overnight; they must have ‘evolved’ over time, whether they were now consolidating unhappy outcomes (e.g., high inequality, slow growth, civil war) or encouraging more virtuous ones (poverty reduction, service delivery, participatory democracy). The key empirical and policy questions then became: Under what conditions do ‘good’ and ‘bad’ institutions emerge?<sup>23</sup> If countries find themselves with ‘bad’ institutions, what can be done by whom to move things in a more constructive direction?

Into this conceptual and policy space stepped an array of impressive studies by economic historians and historical economists that were both intuitively appealing and empirically novel. Engerman and Sokoloff (2002, 2008; see also Sokoloff and Engerman 2000), addressing this phenomena in a comparative analysis of the divergent fortunes of North and South America, argued that the key lay in the types of natural resource endowments, since in both regions land was abundant and labor was scarce. Where the climate was conducive to the cultivation of crops that required large amounts of labor in order to be profitable, such as sugar, colonists resorted to the subjection of local populations (in South America) and/or the importation of slaves (the southern states of North America), in the process institutionalizing laws and social relations consolidating high inequality and elite dominance; where profits could be optimally gained by other means—that is, where the climate supported different kinds of crops or industries requiring different kinds of skilled labour (in the northern states of North America)—then colonists sought instead to attract immigrants and put in place more equitable legal, political and socio-economic arrangements. In these general terms, divergent “paths of development” were thereby set in motion, which, over several centuries, culminated in two qualitatively different development experiences in the Americas.<sup>24</sup> These debates accelerated considerably in terms of both scale and impact with the arrival of a series of seminal papers by Acemoglu, Johnson and Robinson (2001; 2002; 2005), who provided both a seemingly neat empirical solution to the enduring problem of establishing a causal link (courtesy of a new dataset on settler mortality) between institutional quality and development performance, and an explanation for what they termed the ‘great reversal’—the fact that countries that were relatively rich in 1500 were now amongst the poorest today, and vice

> 22 Most cross-national time-series datasets on institutions and economic performance begin around 1960, an artefact of when selected UN agencies began to collect (and coordinate the content of) the relevant figures from national governments. This was also, not coincidentally, a time when economists began to supplant lawyers as the dominant figures in public policy (on this see Markoff and Montecinos 1993).

> 23 Most historians, of course, would refrain from a deploying a normative discourse of ‘good’ and ‘bad’ institutions; we use these terms at this point simply because it reflects how the debate is largely framed in policy discussions. 24 An equally important paper by Sokoloff (1987), though one less influential in policy circles, sought to explain the divergent paths by which patent laws had evolved in the US and UK. Though the law in the former was ostensibly modelled on the latter, markets and social norms in the US proved to be much more open to participation by the lower classes than those in the UK (and within the US, more open in the north than the south), over time generating both different laws and different groups of patentees. Subsequent analysis showed this to be true of laws pertaining to land, suffrage, education, credit and local government (see discussion in Hoff 2003).

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