The Reversal of Fortune Thesis Reconsidered

Acemoglu, Johnson, & Robinson (2002) have claimed that the world incomedistribution underwent a "Reversal of Fortune" from 1500 to the present, wherebyformerly rich countries in what is now the developing world became poor whilepoor ones grew rich. We question their analysis with regard to both of their proxiesfor pre-modern income, namely urbanization and population density. First, analternative measure of urbanization with more observations generates a positive (butnot significant) correlation between pre-modern and contemporary income. Second,we show that their measure of population density as a proxy is highly flawedinasmuch as it does not properly measure density on arable land, and whencorrected with better data the relationship is no longer robust. At best our resultsdemonstrate a Reversal of Fortune only for the four neo-Europes of Australia,Canada, New Zealand and the United States; at worst, we show no Reversal forother former colonies.[...]