1372 THE AMERICAN ECONOMIC REVIEW DECEMBER 2001 supported by the mortality rates of local people mortality)and the current fraction of the popu- in these areas.For example,Curtin (1968 Table lation of European descent. 2)reports that the annual mortality rates of local Naturally,it is impossible to control for all troops serving with the British army in Bengal possible variables that might be correlated with and Madras were respectively 11 and 13 in settler mortality and economic outcomes.Fur- 1,000.These numbers are quite comparable to, thermore,our empirical approach might capture in fact lower than,the annual mortality rates of the effect of settler mortality on economic per- British troops serving in Britain,which were formance,but working through other channels. approximately 15 in 1,000.In contrast,the mor- We deal with these problems by using a simple tality rates of British troops serving in these overidentification test using measures of Euro- colonies were much higher because of their lack pean migration to the colonies and early insti- of immunity.For example,mortality rates in tutions as additional instruments.We then use Bengal and Madras for British troops were be- overidentification tests to detect whether settler tween 70 and 170 in 1,000.The view that the mortality has a direct effect on current perfor- disease burden for indigenous adults was not mance.The results are encouraging for our unusual in places like Africa or India is also approach;they generate no evidence for a direct supported by the relatively high population den- effect of settler mortality on economic sities in these places before Europeans arrived outcomes. (Colin McEvedy and Richard Jones,1975). We are not aware of others who have pointed We document that our estimates of the effect out the link between settler mortality and insti- of institutions on performance are not driven by tutions,though scholars such as William H. outliers.For example,excluding Australia,New McNeill (1976),Crosby (1986),and Jared M. Zealand,Canada,and the United States does not Diamond (1997)have discussed the influence of change the results,nor does excluding Africa. diseases on human history.Diamond (1997),in Interestingly,we show that once the effect of particular,emphasizes comparative develop- institutions on economic performance is con- ment,but his theory is based on the geograph- trolled for,neither distance from the equator nor ical determinants of the incidence of the the dummy for Africa is significant.These re- neolithic revolution.He ignores both the impor- sults suggest that Africa is poorer than the rest tance of institutions and the potential causes of of the world not because of pure geographic divergence in more recent development,which or cultural factors,but because of worse are the main focus of our paper.Work by Ro- institutions. nald E.Robinson and John Gallagher (1961), The validity of our approach-i.e.,our exclu- Lewis H.Gann and Peter Duignan (1962), sion restriction-is threatened if other factors Donald Denoon (1983),and Philip J.Cain and correlated with the estimates of settler mortality Anthony G.Hopkins (1993)emphasizes that affect income per capita.We adopt two strate- settler colonies such as the United States and gies to substantiate that our results are not New Zealand are different from other colonies, driven by omitted factors.First,we investigate and point out that these differences were impor- whether institutions have a comparable effect tant for their economic success.Nevertheless, on income once we control for a number of this literature does not develop the link between variables potentially correlated with settler mor- mortality,settlements,and institutions. tality and economic outcomes.We find that Our argument is most closely related to work none of these overturn our results;the estimates on the influence of colonial experience on insti- change remarkably little when we include con- tutions.Frederich A.von Hayek (1960)argued trols for the identity of the main colonizer,legal that the British common law tradition was su- origin,climate,religion,geography,natural re- perior to the French civil law,which was devel- sources,soil quality,and measures of ethnolin- oped during the Napoleonic era to restrain guistic fragmentation.Furthermore,the results judges'interference with state policies (see also are also robust to the inclusion of controls for Seymour M.Lipset,1994).More recently, the current disease environment (e.g.,the prev- Rafael La Porta et al.(1998,1999)emphasize alence of malaria,life expectancy,and infant the importance of colonial origin (the identity of1372 THE AMERICAN ECONOMIC REVIEW DECEMBER 2001 supported by the mortality rates of local people in these areas. For example, Curtin (1968 Table 2) reports that the annual mortality rates of local troops serving with the British army in Bengal and Madras were respectively 11 and 13 in 1,000. These numbers are quite comparable to, in fact lower than, the annual mortality rates of British troops serving in Britain, which were approximately 15 in 1,000. In contrast, the mor￾tality rates of British troops serving in these colonies were much higher because of their lack of immunity. For example, mortality rates in Bengal and Madras for British troops were be￾tween 70 and 170 in 1,000. The view that the disease burden for indigenous adults was not unusual in laces like kfrica or India is also supported b; the relatively high population den￾sities in these places before Europeans arrived (Colin McEvedy and Richard Jones, 1975). We document that our estimates of the effect of institutions on performance are not driven by outliers. For example, excluding Australia, New Zealand, Canada, and the United States does not change the results, nor does excluding Africa. Interestingly, we show that once the effect of institutions on economic performance is con￾trolled for, neither distance-from the equator nor the dummy for Africa is significant. These re￾sults suggest that Africa is poorer than the rest of the world not because of pure geographic or cultural factors. but because of worse institutions. The validity of our approach-i.e., our exclu￾sion restriction-is threatened if other factors correlated with the estimates of settler mortalitv affect income per capita. We adopt two strate￾gies to substantiate that our results are not driven by omitted factors. First, we investigate whether institutions have a comparable effect on income once we control for a number of variables potentially correlated with settler mor￾tality and economic outcomes. We find that none of these overturn our results: the estimates change remarkably little when we include con￾trols for the identity of the main colonizer, legal origin, climate, religion, geography, natural re￾sources, soil quality, and measures of ethnolin￾guistic fragmentation. Furthermore, the results are also robust to the inclusion of controls for the current disease environment (e.g., the prev￾alence of malaria, life expectancy, and infant mortality) and the current fraction of the popu￾lation of European descent. Naturally, it is impossible to control for all possible variables that might be correlated with settler mortality and economic outcomes. Fur￾thermore, our empirical approach might capture the effect of settler mortality on economic per￾formance, but working through other channels. We deal with these problems by using a simple overidentification test using measures of Euro￾pean migration to the colonies and early insti￾tutions as additional instruments. We then use overidentification tests to detect whether settler mortality has a direct effect on current perfor￾mance. The results are encouraging for our approach; they generate no evidence for a direct effect of settler mortality on economic outcomes. We are not aware of others who have pointed out the link between settler mortality and insti￾tutions, though scholars such as William H. McNeill (1976), Crosby (1986), and Jared M. Diamond (1997) have discussed the influence of diseases on human history. Diamond (1997), in particular, emphasizes comparative develop￾ment, but his theory is based on the geograph￾ical determinants of the incidence of the neolithic revolution. He ignores both the impor￾tance of institutions and the potential causes of divergence in more recent development, which are the main focus of our paper. Work by Ro￾nald E. Robinson and John Gallagher (1961), Lewis H. Gann and Peter Duignan (1962), Donald Denoon (1983), and Philip J. Cain and Anthony G. Hopkins (1993) emphasizes that settler colonies such as the United States and New Zealand are different from other colonies, and point out that these differences were impor￾tant for their economic success. Nevertheless, this literature does not develop the link between mortality, settlements, and institutions. Our argument is most closely related to work on the influence of colonial experience on insti￾tutions. Frederich A. von Hayek (1960) argued that the British common law tradition was su￾perior to the French civil law, which was devel￾oped during the Napoleonic era to restrain judges' interference with state policies (see also Seymour M. Lipset, 1994). More recently, Rafael La Porta et al. (1998, 1999) emphasize the importance of colonial origin (the identity of