The Institutional Dynamics of Colonial Exploitation

This paper focuses on the interaction between the legacy of institutional arrangements and incentives on long-term development. We recalled two studies focusing on the long term effects of geographic discontinuities in colonial practice in India and Peru and we confronted the two historical cases as to emphasise the role of capital accumulation and equality of distribution. Furthermore, we propose an evolutionary game model to capture the evolutionary dynamics of institutional assets defining egalitarian or iniquitous income divisions in a non-cooperative setting. This framework sheds light on the role of the colonial governments in the interaction between local institutions and foreign colonial rule in terms of distribution, resources extraction, social asymmetries and finalised investments.