Master of the Island
Which country is the best colonizer?
A generation ago, Christopher Columbus was a hero. No longer. Even my preteen kids can tell you that Columbus' followers brought disease and death to many New World natives. But as the forerunner of European colonization, can Columbus also claim to have ushered in an era of higher standards of living?
One of the deep questions in economics is why some countries are rich and others are poor. It is widely believed that institutions such as clear and enforceable property rights are important to economic growth. Still, debates rage: Do culture, history, government, education, temperature, natural resources, cosmic rays make the difference? The reason it's hard to resolve this question is that we have no controlled experiments comparing otherwise similar places with different sets of legal and economic institutions. In new research, James Feyrer and Bruce Sacerdote, both of Dartmouth College, consider the effect of a particular aspect of history—the length of European colonization—on the current standard of living of a group of 80 tiny, isolated islands that have not previously been used in cross-country comparisons. Their question: Are the islands that experienced European colonization for a longer period of time richer today?
Imagine the ideal experiment for measuring the role of European colonization on economic growth. You would take a bunch of Europeans, set them down on different isolated islands for different lengths of time, wait a few hundred years, and then check to see whether the islands fertilized with Europeans for longer periods had become more prosperous. The insight of Feyrer and Sacerdote's paper is that the colonization that followed European voyages of discovery to the Pacific created just this experiment.
Mitiaro, Pohnpei, and Aitutaki—these are small islands in the Pacific that were colonized by European explorers at different times. They, and 77 other islands in the Atlantic, Pacific, and elsewhere, constitute the data the authors use in their study. Scholars who have made cross-country comparisons before have ignored these islands. Europeans "discovered" some of these places by accident. Pitcairn Island was colonized when the crew of the HMS Bounty staged a mutiny after an arduous trip to Tahiti under Capt. William Bligh. Explorers encountered Penrhyn, in the Cook Islands, after storms wrecked their vessels on its shores.
Feyrer and Sacedote's key findings are that the longer one of the islands spent as a colony, the higher its present-day living standards and the lower its infant mortality rate. Each additional century of European colonization is associated with a 40 percent boost in income today and a reduction in infant mortality of 2.6 deaths per 1,000 births.
By itself, the relationship between longer colonization and higher living standards could arise either because European contact raised living standards or because European explorers colonized the most promising islands first. The authors cleverly reject the latter possibility by noting that the sailing of the day relied on wind, which meant that islands located where wind is weak were "less likely to be discovered, revisited, and colonized by Europeans." Thus, wind conditions, rather than island promise, determined which islands were colonized first, and so which islands remained as colonies longer. The relationship between colonial duration and wealth reflects the effect of colonization on material living standards, rather than the other way around.
So, what did the Europeans do right? The authors conclude that there's no simple answer. The most plausible mechanisms include trade, education, and democratic government. When the study directly measures these factors, some of them help to explain income differences among islands—for example, the places that traded only basic agricultural products in colonial times now have lower living standards. But even after accounting for these concrete determinants, longer European colonization has some extra pro-growth effect. Exposure to European colonizers, it appears, benefits living standards for reasons apart from the direct effects of government, education, and markets.
To be sure, Europeans have not always been benevolent masters. Before the Enlightenment, they tended to view natives as savages who were better off dead than not baptized. After about 1700, however, attitudes began to change. While 16th-century explorers like Magellan set out to spread Christianity as well as make money, later voyages, like those of English Capt. James Cook between 1768 and 1779, had more explicitly scientific aims. The experience of island colonies reflects the difference. When the authors divide the islands into those that were colonized in the centuries before 1700 and those that were colonized after, current island income is 64 percent higher per century for the post-Enlightenment group but only 11 percent higher per century for the pre-Enlightenment one. And, no, the effects don't appear to stem from the replacement of decimated low-income native populations with higher-income Europeans.
The authors also compare the experiences of separate Pacific islands with eight different colonizers: the United States, Britain, Spain, the Netherlands, Portugal, Japan, Germany, and France. * Their verdict is that the islands that are best off, in terms of income growth, are the ones that were colonized by the United States—as in Guam and Puerto Rico. Next best is time spent as a Dutch, British, or French colony. At the bottom are the countries colonized by the Spanish and especially the Portuguese.
There is no disputing that thousands died in the wake of European explorers' discovery of the New World. That's bad. But we can still give a small cheer for Columbus, because European colonization brought riches in its wake.
Joel Waldfogel is the Ehrenkranz Family Professor of business and public policy at the Wharton School of the University of Pennsylvania. His new book is The Tyranny of the Market: Why You Can't Always Get What You Want.
Illustration by Robert Neubecker.