European influence and economic development

The development accounting literature identifies political institutions as fundamental development determinants. Forms of government or executive constraints are thought to shape economic institutions (e.g., property rights) which provide the necessary incentives for economic growth. The consensus in this literature is that European influence affects economic development, presumably via the adoption of European institutions. But how exactly did European influence in the distant past induce positive economic outcomes today? While previous approaches rely on “language,” “settler mortality,” “legal origins,” or the “number of European settlers” as indirect proxies of European influence, we propose a direct and quantifiable mechanism: the adoption of European constitutional features. We construct a dataset of all constitutional dimensions in all countries from 1800-2008, and find that nations experience growth spurts after adopting features of European constitutions. The growth effects are influenced (negatively) by periods of political turmoil, but they are independent of colonial backgrounds. These results imply that countries have been able to overcome adverse initial conditions over the last 200 years by adjusting European influence via the adoption of European constitutional features. Our constitutional dataset is also sufficiently detailed to identify which dimensions of European constitutions matter for development, namely legislative rules and provisions that curtail executive power.