Geography, history, and economic performance: the emergence and evolution of agrarian institutions in Ecuador.
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A familiar proposition from the literature on geography, institutions, and economic performance is that certain natural resources like mineral deposits or cash crops can create a "resource curse." In Ecuador, cash crops production did not create this effect. Instead, the agrarian institutions in provinces with cash crops production allowed more wealth accumulation than the institutions of the provinces where these products were not available. This paper argues that sixteenth-century population differences across Ecuadorian regions led to distinct agrarian institutions, and that the evolution of these institutions perpetuated specific economic outcomes. In particular, the Ecuadorian highlands had more extractive agricultural institutions than the coast. This institutional variation might explain why the coastal provinces rely less on agriculture today despite producing cash crops. Statistical analysis suggests that institutional differences might explain why the Ecuadorian coast has a higher per capita income and less extreme poverty than the provinces in the highlands.