Tuesday, July 4, 2023

Economic path dependence and persistence

From Income and inequality in the Aztec Empire on the eve of the Spanish conquest by Guido Alfani and  Alfonso Carballo.  From the Abstract:

Today, Latin American countries are characterized by relatively high levels of economic inequality. This circumstance has often been considered a long-run consequence of the Spanish conquest and of the highly extractive institutions imposed by the colonizers. Here we show that, in the case of the Aztec Empire, high inequality predates the Spanish conquest, also known as the Spanish–Aztec War. We reach this conclusion by estimating levels of income inequality and of imperial extraction across the empire. We find that the richest 1% earned 41.8% of the total income, while the income share of the poorest 50% was just 23.3%. We also argue that those provinces that had resisted the Aztec expansion suffered from relatively harsh conditions, including higher taxes, in the context of the imperial system—and were the first to rebel, allying themselves with the Spaniards. Existing literature suggests that after the Spanish conquest, the colonial elites inherited pre-existing extractive institutions and added additional layers of social and economic inequality.

There is a field of research which argues, with some decent data, that date of adoption of technology is a predictor of later national income levels.  If a region adopted Iron in 1500 BC, you can use that information to forecast its world rank in income in 2000.

Similarly, there is the work of Gregory Clark which demonstrates the persistence of advantageous behavioral traits across many generations either due to assortative mating and gene selection or due to family culture persistence.  

This research would seem to support the idea of economic system trade-off persistence.  

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