Potential determinants of current GDP. Is early human capital related to the

The aim of the following regressions is to analyze the determinants of the current GDP, especially if the early numeracy could be a determinant of economic development. I collected the data of current regional GDP per capita from the 2000 values from the world development indicators. The gross state product of each region is divided by the present population and converted to per capita values. To deal with the problem that some of the values are not comparable across regions, I used the log of the value, and I include country and half decade

38 In this case the reference category is no pre colonial main activity.

136

control variables. Hence, the variables and estimated effects of the regressions can be interpreted as log deviations from country means. The basic form of the regression is:

GDPrc= earlynumeracy+ Brcβ+ Crcδ+ Nc+E

Where B refers to the set of historical/institutional variables mentioned above; C to the geographical and climate, country/half decade and age groups control variables; E is the error term.

Table 4.6 reports the results. The aim of this regression is to prove if there is a relation between the early Human capital and the current GDP. In other words, the objective is to test if the pre-modern Human capital was necessary for the present economic growth. Apparently, it was but in a small degree. The results displayed in Table 6 shows that there is a positive and significant relation between the current GDP and numerate, however, the coefficient is low.

TABLE 4.6. DETERMINANTS OF CURRENT GDP. IS EARLY HUMAN CAPITAL LINKED TO THE CURRENT ECONOMIC GROWTH?

137

138

Age 43-52 -0.03***

(0.000)

Age 53-62 -0.06***

(0.000)

Constant 9.14*** 9.15*** 9.23*** 9.23***

(0.000) (0.000) (0.000) (0.000)

Observations 90,643 90,643 83,561 82,946

R-squared 0.65 0.74 0.79 0.79

pval in parentheses

*** p<0.01, ** p<0.05, * p<0.1

Constant: Brazil 1750, System farm/hacienda, Age 23-32 (model 4)

In the first model (column 1) I related only current GDP and numerate including the control variables of country/half decade. In the second I incorporated the institutional/historical pre-colonial primary activity. In this case, the constant refers to the combination of farm/hacienda system. As expected plantation and mining pre-colonial economies are negative and significantly related to the current GDP, however, the shifting economies remained positive.

When I include the control variables of climate and geography, the relation between mining and plantation with GDP remain significant. Moreover, the relationship between early numeracy and current GDP remain significant and positive even if the historical/institutional and control variables are included in the model. The inclusion of the age group 23-32 as control variable makes that the relation between current GDP and early numeracy loose significance.

Like the results of the Logit model, these results are as well in concordance with some of the arguments of the institutional hypothesis. However, the study of the relation between current GDP and early numeracy was not explored before. From the results, it is possible to estimate that those regions which performed better Human capital in the pre-modern times have relatively higher levels of current GDP. Hence, since early periods Human capital could have influenced the economic development.

139

4.9CONCLUSIONS

This Chapter explores the differences in the formation of Human capital within countries in Latin America. From the empirical evidence it is possible to confirm some hypotheses set up previously by the institutional literature: (1) higher numeracy trends appear in the lowest populated regions before the conquest and in the cattle economies; lower numeracy trends appear in the densely populated native areas before the conquest and in the mining and plantation economies. These two facts agree with the institutional hypothesis, which claims that depending on natural resources were shaped “good” or “bad” institutions. These “good” or

“bad” institutions seem to have promoted “better” or “worse” Human capital.

(2) Some of the determinants that are negatively related to the formation of Human Capital are the mining and shifting pre-colonial activities and the densely populated areas before the conquest. The combination of family farm and hacienda system seems to have a positive influence on the formation of Human Capital.

Furthermore, this Chapter arrives at some original conclusions that are not explored by the literature: (3) the national capital was not in every country the highest numerated in comparison with other regions. Depending on the country the formation of Human capital was not always linked to the central administration. At the very beginning, the formation of Human Capital seems to be related to the economic activity of the region and not with a primary purpose to provide necessary skills to the workforce. (4) The institutional hypothesis claimed that the gap between the developed and undeveloped countries started in the colonial period. However, the key factor to make the gap deeper was the introduction of technological change into production.

Regarding the formation of human capital, it is possible to highlight that the roots of early Human capital were given before in the beginning of the 1750s, hence before the introduction of technological change. The cartography shows that already in 1750 the numeracy of the

140

Southern Atlantic territories was higher than other regions. (5) Through the coefficient of variation by countries, it is possible to conclude that the inequalities of Human capital within the countries are a detriment to the formation of Human Capital. Those countries with high levels of inequalities within regions also have the worst performance in numeracy. (6) Finally, the regressions results show that the early formation of Human Capital is relevant for current economic growth.

141

4.10R^EFERENCES

ACEMOGLU, D. GALLEGO, F. ROBINSON J.A. (2014); Institutions, Human capital and development, Forthcoming Annual Review of Economics.

ACEMOGLU, D., JHONSON, S. and ROBINSON, A. (2001), “The colonial origins of comparative development: an empirical investigation”, The American Economic Review, 91, 5.

ACEMOGLU, D., JHONSON, S. and ROBINSON, A. (2002), “Reversal of fortune:

Geography and institutions in the making of the World income distribution”The Quarterly Journal of Economics, Vol. 117, 4.

ACEMOGLU, D. and ROBINSON, A. (2012), Why Nations fails? The origin of Power, Prosperity and Poverty, Estados Unidos, Random House.

A`HEARN, B., BATEN, J. CRAYEN, D. (2009). "Quantifying Quantitative Literacy: Age Heaping and the History of Human Capital." The Journal of Economic History Vol.69, N°3.

AMANN, E. and BAER, W. (2010), “Las causas de la desigualdad en Brasil y los intentos de superarla” in “Teoría Económica y Desarrollo Social. Exclusión, Desigualdad y Democracia. Homenaje a Adolfo Figueroa”, Edited by Félix Jiménez. Libros PUCP, Departamento de economía, Pontificia Universidad Católica del Perú.

ALVAREZ, Michael, CHEIBUB, José A., LIMONGI, Fernando and Adam PRZEWORSKI, Adam, (2000), Democracy and Development: Political Institutions and Material Well-Being in the World, 1950-1990. Cambridge: Cambridge University Press.

ARMSTRONG, W. (1978): “New Zealand imperialism, class and uneven development”, Australian and New Zealand Journal of Sociology, 16 297 – 303

AZEVEDO, Fernando (1963) A cultura brasileira. Brasilia: Ed. Universidade de Brasilia.

BACHI, R. (1951), "The tendency to round off age Returns: Measurement and correction, Bulletin of International Statistical Institute, 33.

BATEN, J. and MUMME, C., (2010), "Globalization and Educational Inequality during 18th to 20th Centuries: Latin America in Global Comparison", Journal of Iberian and Latin American History, 28, 2.

BATEN, J. and J. L. VAN ZANDEN (2008). Book production and the onset of modern economic growth, Journal of Economic Growth 13 (3): 217-235

BENAVOT, A. and P. RIDDLE, P. (1988). The Expansion of Primary Education, 1870-1940:

Trends and Issues, Sociology of Education 61 (3): 191-210

BÉRTOLA, L. – PORCILE, G. (2002) “Rich and impoverished cousins: economic performance an income distribution in southern settler societies” XIII International Economic History Congress. Bs. As.

BRUHN, M. and GALLEGO, F. (2012), "Good, Bad and Ugly Colonial Activities: Do they matter for the economic development?", The Review of Economics and Statistics, 94, 2.

BUCHER, Tobias (2013), Regionale Humankapitalentwicklung in England während der Industriellen Revolution: können Indikatoren auf Basis von Sterberegistern gebildet werden?, Bachelor thesis, University of Tuebingen

BULMER THOMAS, Victor (2003), La historia económica de América Latina desde la independencia” México, FCE.

CAIN, P. – HOPKINS, A. (1999) Gentlemanly capitalism and British imperialism: the new debate on empire. Raymond E. Dumet Ed. London

COATSWORTH, John, (1993), "Notes on the Comparative Economic History of Latin America and the United States," in Walter L. Bernecker and Hans Werner Tobler, eds., Development and Underdevelopment in America: Contrasts in Economic

142

Growth in North and Latin America in Historical Perspective (New York, NY:

Walter de Gruyter.

COLE, J.P. (1965), Latin America. An economic and social geography, Butterworths, London. Economic Growth: New estimation strategies for Western Europe and the U.S.-17^th-19^th centuries”, University of Tuebingen. Working papers in Economics and Finance.

DENOON, D. (1983) Settler Capitalism: the Dynamics of Dependent Development in the Southern Hemisphery. Oxford, Clarendon University Press.

DJANKOV, Simeon, LA PORTA, Rafael, LOPEZ de SILANES, Florencio and SHLEIFER, Andrei (2003), “The New Comparative Economics,” Journal of Comparative Economics 31(4), 595-619.

EMIGH, R. (2002), "Numeracy or enumeration? The use of numbers by States and Societies", Social Science History, 26, 4.

EASTERLY, William, and LEVINE, Ross, (2002-2003) “Tropics, Germs, and Crops: How Endowments Influence Economic Development,” J. Mon. Econ. 50, 1:3-39.

ENGERMAN, Stanley and SOKOLOFF, Kenneth, (1997) "Factor Endowments, Institutions, and Differential Paths of Growth among New World Economies," in S. H. Haber, ed., How Latin America Fell Behind (Stanford, CA: Stanford University Press, 1997).

ENGERMAN, Stanley and SOKOLOFF, Kenneth (2000) "Institutions, Factor Endowments, and Paths of Development in the New World," Journal of Economic Perspectives, XIV,217-232.

ENGERMAN, S., MARISCAL, E and SOKOLOFF, K. (2009), “The Evolution of Schooling Institutions in the Americas, 1800–1925.” In Human Capital and Institutions: A Long-Run View, edited by David Eltis, Frank Lewis, and Kenneth Sokoloff, 93–142. New York: Cambridge University Press.

FRIESEN, J., BATEN J. and PRAYON, V. (2012), “Women count. Gender (in) equalities in the Human capital development in Asia. 1900-1960”, Working papers of University of Tuebingen N°29

FURTADO, Celso, (1970). Formagdo económica da América Latina, 2nd Ed. Rio de Janeiro:

Lia.

GALOR, O. (2004): “From Stagnation to Growth: Unified Growth Theory”. En Aghion, P. y Durlauf, S. (eds.) Handbook of Economic Growth. Ed. North-Holland.

GALOR, O. and O. MOAV (2002). Natural Selection and the Origin of Economic Growth, Quarterly Journal of Economics 117: 1133-1192

GALOR, O. and D. N. WEIL (2000). “Population, Technology and Growth: From the Malthusian Regime to the Demographic Transition”, American Economic Review 90 (4): 806-828

GLAESER, Edward and LA PORTA, Rafael, LOPEZ de SILANES, Florencio, SHLEIFER, Andre, (2004), “Do institutions cause growth?”, Working Paper 10568 http://www.nber.org/papers/w10568, NATIONAL BUREAU OF ECONOMIC RESEARCH, 1050 Massachusetts Avenue.

GOMES, Candido (1993), “Education, Democracy and Development in Latin America”

International Review of Education, Vol. 39, No. 6.

HIPPE, R. and BATEN, J. (2011), Regional inequalities in Human Capital formation in Europe.

1790-1880, working paper. Asociación Francesa de Cliometría.

143

JONES, Eric (1987), The European Miracle: Environments, Economies and Geopolitics in the History of Europe and Asia, Cambridge University Press

JUIF, D. and BATEN, J., (2013), “On the Human capital of Inca Indios before and after the Spanish conquest. Was there a pre-colonial legacy?”, University of Tuebingen. Working papers in Economics and Finance N°27.

KLEIN, H. (2003): A concise History of Bolivia, Cambridge: Cambridge University Press.

Mc. ARTHUR, John and SACHS, Jeffrey (2001), “Institutions and geography: Comment on Acemoglu, Johnson and Robinson (2000)”, Working paper 8114, National Boreau of Economic Research.

Mc EVEDY, Collin and JONES, Richard, (1978) Atlas of World Population History, New York, NY: Facts on File.

Mc. NEILL, William, (1963), The Rise of the West: A History of the Human Community, University of Chicago Press

Mc. NEILL, William, (1974), The Shape of European History, Oxford University Press.

MANZEL, K., BATEN, J., and STOLZ, Y., (2012). "Convergence and divergence of numeracy: the development of age heaping in Latin America, 17th to 20th centuries.", Economic History Review, Vol 65, N°3.

MEADE, Teresa (2004), A brief history of Brazil, NY, Checkmark books Facts on files Inc.

MORALES, Waltraud (2010), A brief history of Bolivia, California, Facts on file Inc.

MYERS, R. (1976), "An instance of reverse Heaping of Ages", Demography, 13, 4.

NEWLAND, C. (1992), “Ingresos y capital humano: el caso de Buenos Aires a mediados del siglo XIX” Revista de Historia Económica-Journal of Iberian and Latin American Economic History. 10(3):451-466

NORTH, D. (1991), “Institutions”, The Journal of Economic Perspectives, 5(1), pp. 97–112 NURKSE, R. (1961): Equilibrium and Growth in the World Economy, Cambridge, Mass.,

Harvard University Press

PLÖTZ, Julia (2013), Human Capital Trends in Central America and the Caribbean from the 18th to the 20th Century; Bachelor thesis, University of Tuebingen

PRADO, J. C. (1979), “Historia Económica do Brasil”, San Pablo, Editora Brasiliense.

PREBISH, Raúl. (1963), Hacia una dinámica del desarrollo latinoamericano. Mexico, DF:

Fondo de Cultura Econ6mica.

LANDES, David (2007), The wealth and poverty of Nations, London, Abacus.

LEWIS, W. Arthur, (1978) Growth and Fluctuations, 1870-1913. London, UK: George Allen and Unwin.

LIPSET, Seymour M. (1960), Political Man: The Social Basis of Modern Politics. New York:

Doubleday.

LUCAS, R. E. (1988): “On the mechanics of economic developement”. Journal of Monetary Economies, 22.

RAMA, G. and TEDESCO, J.C., (1979), Education and development in Latin America (1950-1975), International review of education, Vol 25 N° 2.

REIS, J. (2005). Economic Growth, Human Capital Formation, and consumption in Western Europe Before 1800 Living standards in the past,O. U. press. Oxford.

REIS, J. (2008). "How helpful is age heaping? An exploration using Portuguese data." Working paper, Univ. Lisbon.

ROMER, P. (1990): “Endogenous technological change”. Journal of Political Economy, Vol.

98, Nº5 Part II: S71 – S102

SACHS, Jeffrey (2000), Notes on a New Sociology of Economic Development, in Lawrence E. Harrison and Samuel P. Huntington, eds., Culture Matters: How Values Shape Human Progress, New York, NY: Basic Books

SACHS, Jeffrey (2001), “Tropical Underdevelopment”, NBER Working Paper No. 8119.

144

SPOORENBERG, T. and DUTREUILH, C. (2007), "Extension and Application of the Modified Whipple's Index", Institut National d'Études Démographiques, Vol. 62, 4.

STOLZ, Y., BATEN, J. and REIS, J., (2009), "Portuguese living standards 1720-1980.

Heights, Income and Human Capital, Working papers Universität Tübingen.

TÁNDETER, Enrique (1992), Coacción y mercado. La minería de la plata en el Potosí colonial 1692-1826, centro de estudios regionales andinos Bartolomé de las casas, Cusco.

WRIGLEY, Edward, (1988), Continuity, Chance and Change, Cambridge, UK: Cambridge University Press.

ZELNIK, M. (1961), "Age Heaping in the United States Census: 1880-1950", The Milbank Memorial Fund Quarterly, 39, 3.

145

4.11A^PPENDIX

Appendix 1. Cartography

FIGURE 4.10 ABCC PER PROVINCE. 1750

Source : familysearch.org

146

FIGURE 4.11. ABCC PER PROVINCE. 1800

Source: familysearch.org

147

FIGURE 4.12. ABCC PER PROVINCE. 1850

Source: familysearch.org

148

Im Dokument The formation of Human capital in pre-modern Latin America (Seite 135-148)