Sunny climate, clouded institutions

A historian explores links between climate, equity and development

By Charo Quesada

Rich land, a benevolent climate and abundant human capital could account for the huge differences between north and south in the Americas, according to some experts.

The tremendous disparities between north and south continue to baffle those who seek to correct them, development experts included.

This gap is particularly striking in the Americas. Politicians, historians and economists have tired of asking why the southern part of the hemisphere and the Caribbean, formerly the seat of great aboriginal and colonial empires, are today decades behind their neighbors to the north.

Two possible explanations for the phenomenon are frequently voiced today. The first argues that the colonial era exploited and exhausted the region’s material and human resources, leaving an insurmountable legacy of backwardness and inequality. The second maintains that the English-speaking settlers of the north brought with them more highly developed institutions that guaranteed a more equitable and democratic society from the start.

Kenneth L. Sokoloff, a professor of economic history at the University of California, Los Angeles, maintains that climate and soil quality have conditioned the different paths taken by the north and south.

Sokoloff, who presented an essay entitled Institutions, Factor Endowments, and Paths of Development in the New World at a conference at the IDB’s Washington, D.C., headquarters last February, suggests the following thesis. When the Spaniards and Portuguese reached the shores of this continent, they settled in those parts of the Caribbean and the mainland that offered warm, hospitable climates, fertile soil or rich minerals deposits. The colonists established large agricultural plantations and mining operations that required large numbers of inexpensive workers. Where no indigenous populations were available, slaves were imported from Africa. From the beginning, then, inequality formed part of the system. The institutions born under that system protected the interests of the elite, drastically limiting those of the exploited masses.

In contrast, the northern part of the hemisphere had very little to offer the English-speaking settlers, apart from room to dream. An inhospitable climate in some cases, land that was not very fertile, and too few aboriginals to exploit it on a large scale, favored better land distribution, leading to larger numbers of individual landowners.

The more equitable distribution of wealth and power in the north contrasted with the arbitrary distribution that existed in the rest of the Americas. This, argues Solokoff, contributed to a distinct evolution of institutions, which were much more participative and advanced in the north in crucial areas such as the right to vote, equitable distribution of power and access to education.

This would explain the initial boom in the colonial societies in the Caribbean and the Southern Hemisphere and their decline at the end of the 18th century, when the northern colonies had begun to benefit from the industrial revolution. The gap between the two continued to grow.

According to Sokoloff, external factors such as the nationality of the settlers and their religious, political and cultural baggage did not determine the different directions taken in the region, but were factors added to internal ones that sprang from existing natural conditions.

Professor Sokoloff supports his arguments with statistics and examples. The British settlers in the Caribbean, for example, suffered the same fate as their neighbors despite belonging to the British Empire. Argentina, Uruguay and Costa Rica, however, can be cited as relative exceptions to the rule that the Spanish Empire laid down for all its colonies.

In short, Institutions, Factor Endowments, and Paths of Development in the New World suggests a major paradox: natural wealth and a good climate dealt much of the Americas a bad hand. And the problem has still not been solved.

Date posted: June 2001