Factor Endowments, Institutions, and Differential Paths of Growth Among New World Economies:

AbstractGrape quality and the nature of market demand played a major role in determining the organizational structure of the wine industry in the three decades prior to 1914. In contrast to Europe where grape growing and winemaking were specialist activities, in the New World winemaking and selling were often integrated. This encouraged the appearance of large industrial wineries producing wines that could be branded. Differences within the New World itself can be attributable to the nature of demand and, in particular, to whether wine was considered an article of primary consumption (Argentina), or whether it competed with other, more popular alcoholic beverages such as beer and spirits (Australia and California).

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History Lessons: Institutions, Factor Endowments, and Paths of Development in the New World

The Journal of Economic Perspectives ◽

10.1257/jep.14.3.217 ◽

2000 ◽

Vol 14 (3) ◽

pp. 217-232 ◽

Cited By ~ 642

Author(s):

Kenneth L Sokoloff ◽

Stanley L Engerman

Keyword(s):

Economic Development ◽

Growth And Development ◽

New World ◽

Initial Conditions ◽

Factor Endowments ◽

Long Run ◽

National Heritage ◽

Wide Range ◽

North And South America ◽

North And South

The explanations offered for the contrasting records of long-run growth and development among the societies of North and South America most often focus on institutions. The traditional explanations for the sources of these differences in institutions, typically highlight the significance of national heritage or religion. We, in contrast, argue that a hemispheric perspective across the wide range of colonies established in the New World by the Europeans suggests that although there were many influences, factor endowments or initial conditions had profound and enduring effects on the long-run paths of institutional and economic development followed by the respective economies.

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