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Introduction to Modern Economic Growth In places with a large indigenous population, Europeans could exploit the population This was achieved in various forms, using taxes, tributes or employment as forced labor in mines or plantations This type of colonization was incompatible with institutions providing economic or civil rights to the majority of the population Consequently, a more developed civilization and a denser population structure made it more profitable for the Europeans to introduce worse economic institutions In contrast, in places with little to extract, and in sparsely-settled places where the Europeans themselves became the majority of the population, it was in their interests to introduce economic institutions protecting their own property rights (and also to attract further settlers) 4.4.4 Settlements, Mortality and Development The initial conditions of the colonies we have emphasized so far, indigenous population density and urbanization, are not the only factors affecting Europeans’ colonization strategy In addition, the disease environments differed markedly among the colonies, with obvious consequences on the attractiveness of European settlement Since, as we noted above, when Europeans settled, they established institutions that they themselves had to live under, whether Europeans could settle or not had a major effect on the subsequent path of institutional development In other words, we expect the disease environment 200 or more years ago, especially the prevalence of malaria and yellow fever which crucially affected potential European mortality, to have shaped the path of institutional development in the former European colonies and via this channel, current institutions and current economic outcomes If in addition, the disease environment of the colonial times affects economic outcomes today only through its effect on institutions, then we can use this historical disease environment as an exogenous source of variation in current institutions From an econometric point of view, this will correspond to a valid instrument to estimate the casual effect of economic institutions on prosperity Although mortality rates of potential European settlers could be correlated with indigenous mortality, which may determine income today, in practice local populations had developed much greater immunity to malaria and yellow fever Acemoglu, Johnson and Robinson (2001) present a 193