The Colonial Origins of Comparative Development: A Summary

Acemoglu, Johnson and Robinson (AJR) attempt to measure the effects of institutions on income differences by introducing an exogenous source of variation in institutions to measure their differing outcomes. They begin by pointing out that the history of colonisation resulted in different institutions being formed: some countries received extractive institutions (whereby the coloniser would simply extract all resources but would not build proper institutions to promote growth and sustainable living) whilst others received inclusive institutions. This depended upon the ability for colonisers to settle, if a country was full of disease then the coloniser would not wish to live in this colony, but simply take as many resources as possible and then leave. [...]