The Role of Historical Malaria in Institutions and Contemporary Economic Development

Abstract

This research examines the causal impact of institutional quality on economic development from a novel perspective. At the country level, we exploit variation in the malaria prevalence in 1900, just before vector-control methods were developed, to instrument for institutional quality using a two-stage least squares instrumental variables framework. Our instrument is a population-weighted average of malaria endemicity estimates for the year 1900 developed by the WHO in the 1960s. We argue that this measure of historical malaria offers more expansive geographic information about the disease environment than other metrics, and our baseline IV estimates reveal that greater institutional quality causes greater contemporaneous economic growth. Next, we investigate the robustness of these baseline results to alternative explanations, including the role of geography and early colonizers’ experiences, as the causal link between the early disease environmental, institutional quality and contemporary growth. As an additional test of the explanatory power of malaria endemicity, we replace our instrument for settler mortality and replicate the core results from the seminal study on the colonial origins of comparative development by Acemoglu et al. (2001). In summary, we propose that malaria endemicity, estimated for 1900, holistically explains the legacy of early disease on institutional quality development and contemporary economic development.