North America’s Early Lead Over Latin America

22 07 2011

North Americans have been wealthier than Latin Americans for many centuries, at least since the 17th century. At least, this is the argument of a new paper by Robert C. Allen, Tommy E. Murphy and Eric B. Schneider.


Summary: We begin by measuring real wages in North and South America between colonization and independence, and comparing them to Europe and Asia. We find that for much of the seventeenth and eighteenth centuries, North America was the most prosperous region of the world, offering living standards at least as high as those in the booming parts of North-Western Europe. Latin America, on the other hand, was much poorer and offered a standard of living like that in Spain and less prosperous parts of the world in general.

My thoughts: Latin America and North America were and are big places with huge disparities of culture, natural resources, and per capita income. Is any category that includes both the Amazonian jungle and downtown Buenos Aires really useful? 

 This study is based on just six locations: “Boston, Philadelphia, and the Chesapeake Bay region in North America and Bogotá, Mexico, and Potosí in Latin America”. Well the three locales in North America studied were all on the coast and relatively close to each other. Wouldn’t it be fair to include, say, Newfoundland, New France, Rupert’s Land, and Detroit as well? I know that there are always problems with getting sources, but a sample size of three is just too small, IMHO. 

So my verdict is that this paper is an interesting starting point for research, but the authors need to increase their sample size.


Hat tip to Tyler Cowen.