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Average Protection Against Risk of Expropriation, 1985-95 Introduction to Modern Economic Growth USA 10 CAN AUS NZL SGP IND HKG BRA CHL VEN PRY URY MYS IDN BHS TTO MEX COL PNG JAM CRI MAR EGY ECU ARG GUY BOL DOM PAN PER DZA TUN VNM LKA PAK MMR PHL HND NIC GTM SLV LBY BGD HTI -5 Log Population Density in 1500 Figure 4.10 The Institutional Reversal: population density in 1500 and economic institutions today among the former European colonies The explanation for the reversal that emerges from the discussion so far is one in which the economic institutions in various colonies were shaped by Europeans to serve their own (economic) interests Moreover, because conditions and endowments differed between colonies, Europeans consciously created different economic institutions, which persisted and continue to shape economic performance Why did Europeans introduce better institutions in previously-poor and unsettled areas than in previously-rich and densely-settled areas? Without going into details, a number of obvious ideas that have emerged from the research in this area can be mentioned Europeans were more likely to introduce or maintain economic institutions facilitating the extraction of resources in areas where they would benefit from the extraction of resources This typically meant areas controlled by a small group of Europeans, as well as areas offering resources to be extracted These resources included gold and silver, valuable agricultural commodities such as sugar, but most importantly, what is perhaps the most valuable commodity overall, human labor 192