Jamestown colony in 1607 and culminating in the War of
Independence and the enactment of the U.S. Constitution
shares many of the same characteristics as the long
struggle in England of Parliament against the monarchy, for
it also led to a centralized state with pluralistic political
institutions. The Industrial Revolution then spread rapidly to
such countries.
Western Europe, experiencing many of the same
historical processes, had institutions similar to England at
the time of the Industrial Revolution. There were small but
consequential differences between England and the rest,
which is why the Industrial Revolution happened in England
and not France. This revolution then created an entirely new
situation and considerably different sets of challenges to
European regimes, which in turn spawned a new set of
conflicts culminating in the French Revolution. The French
Revolution was another critical juncture that led the
institutions of Western Europe to converge with those of
England, while Eastern Europe diverged further.
The rest of the world followed different institutional
trajectories. European colonization set the stage for
institutional divergence in the Americas, where in contrast
to the inclusive institutions developed in the United States
and Canada extractive ones emerged in Latin America,
which explains the patterns of inequality we see in the
Americas. The extractive political and economic institutions
of the Spanish conquistadors in Latin America have
endured, condemning much of the region to poverty.
Argentina and Chile have, however, fared better than most
other countries in the region. They had few indigenous
people or mineral riches and were “neglected” while the
Spanish focused on the lands occupied by the Aztec,
Maya, and Incan civilizations. Not coincidentally, the
poorest part of Argentina is the northwest, the only section
of the country integrated into the Spanish colonial economy.
Its persistent poverty, the legacy of extractive institutions, is
similar to that created by the Potosí mita in Bolivia and
Peru (this page–this page).
Africa was the part of the world with the institutions least
able to take advantage of the opportunities made available
by the Industrial Revolution. For at least the last one
thousand years, outside of small pockets and during limited