chapter  12
23 Pages

Land abundance, frontier expansion and appropriability

Settler economies during the first globalization 1
WithHenry Willebald

Settler economies are characterized by an abundance of natural resources. However, natural capital is not homogeneous and this leads to differences in economic performance. I discuss the effect of natural resources on production and income distribution in the agriculture sector from the mid-nineteenth century to WWI, in the tradition of the curse (and blessing) of the natural resources hypothesis. I consider the interaction between the natural resources a country possesses, the type of land it has as regards agricultural aptitude, and the quality of its institutions in terms of the concept of the appropriability of a resource. I propose two approaches. One is based on estimating the statistical relationship between economic performance, natural resources and institutions, and the other is based on the historical description of the distribution of land rights in the River Plate and Australasia. In the first, I reject the notion that an abundance of natural resources is a curse for agricultural production but I do not reject it as regards income distribution. Expanding the frontier onto the best lands makes for worse income distribution but the action of institutional quality on high aptitude land improves equality. I include the second approach to give historical context to my analysis. I consider the institutional arrangements governing land ownership, and they seem to have been suitable for obtaining high levels of income but inadequate to promote more egalitarian societies. Appropriability problems were more intense in former Spanish colonies than in former British ones, and the curse of natural resources was more intense in the Hispanic countries in terms of inequality.