Colonization and Genetics of Comparative Development

This paper examines the hypothesis that genealogical closeness to populations that are at the frontier of technological innovations facilitates the diffusion of development (e.g., Spolaore and Wacziarg, 2009). Proponents of this hypothesis argue that it is supported by a strong negative cross-country correlation between genetic distance to the United States and income per capita. This paper argues that there is no causal relationship between these two variables. This is because there are important variables, such as European settler mortality at the time of colonization that simultaneously affect countries' genetic distance to the technological frontier and their current economic performance. Controlling for confounding factors removes the statistical association between genetic distance and economic performance. IV estimates also confirm the lack of significant statistical relationship between genetic distance and economic performance. Further, fixed effect estimates show that those countries that became genetically closer to the world technological frontier over the past 500 years did not become richer because of it.