On August 17, The Economist published a piece titled “The world’s most influential economist is oddly unconvincing,” examining Daron Acemoglu, the MIT economist who shared the 2024 Nobel Prize with Simon Johnson and James Robinson for work on how institutions shape prosperity. Nobody disputed his productivity or standing as among the most-cited economists alive, but the article raised doubts about the empirical foundations of his most celebrated work, particularly the settler mortality data underlying the 2001 paper on colonial origins of development.
A 2012 critique by economist David Albouy showed that figures for some countries were simply borrowed from other countries, and a later Nobel Committee report called them sketchy. A deeper worry followed: “institutions matter” risks becoming circular once institutions are defined broadly enough, and identified retrospectively, to fit whatever outcome one wants explained.
That skepticism deserves to reach further than the settler mortality regressions. The trouble with the Acemoglu account is treating colonization as a founding moment, the point at which a society’s institutional trajectory was fixed for centuries, rather than one episode layered onto histories that already had their own political arrangements. Colonies had a history before colonization; societies are not merely the residue left behind by a colonial power, and inherited structures and constraints on rulers shape how any subsequent institutional imposition actually lands.
Historians of Africa make exactly this point about the continent the reversal-of-fortune thesis leans on most heavily. John Beattie’s research showed that many pre-colonial polities had mechanisms limiting what a ruler could do, absent anything resembling a written constitution, and E. C. Ejiogu traced a parallel pattern of indigenous checks on centralized authority in West Africa predating European contact. Fitting either finding into a story where “extractive” and “inclusive” institutions are essentially colonial creations takes effort. If constraints on rulers already existed, the puzzle is not why colonialism destroyed institutions that had been there all along, but why the growth Acemoglu’s framework predicts from that inheritance failed to materialize even before colonization.
Nor does the reversal-of-fortune thesis fare better when its statistical machinery is tested directly. Beyond the settler mortality problem, its geographic scope is thin: a close re-examination suggests the story holds for a small handful of countries, and the mechanism doing the actual work is not colonialism in general but British colonialism specifically. Nearly the entire argument rests on the United States, Canada, Australia, and New Zealand, the four colonies that received overwhelming British settlement and that scholars call the Neo-Europes. Once these four and the anomalous city-states of Hong Kong and Singapore are removed, the celebrated relationship between pre-colonial conditions and modern property rights collapses. Urbanization and population density in 1,500, meant to capture how attractive a colony was for settlement, lose virtually all explanatory power outside these six cases, and a regression of expropriation risk on the same indicators shows the same collapse.
What explains the pattern is not settlement itself but the identity of the settler. Nine of the ten countries with the strongest property rights protections in the comparative sample were former British colonies. Spanish colonization in Latin America also brought large numbers of settlers, yet produced a durable elite that entrenched extractive institutions. British settlers carried a distinct constitutional inheritance rooted in centuries of parliamentary constraint on the crown, and that inheritance, not settlement in the abstract, appears to travel with them. Even the scale of British settlement was closer to all-or-nothing than gradual: settlers formed the overwhelming majority in the four Neo-Britains, while in nearly every other British colony they never exceeded five percent.
The instrumental-variable strategy linking settler mortality, property rights, and income runs into the same wall. Excluding the four Neo-Britains, settler mortality’s strength as an instrument falls well below conventional reliability thresholds, and in one fully specified model it no longer predicts property rights at all. What little power remains is carried largely by Hong Kong and Singapore, whose rapid, colonially-engineered transformation into trading ports bears little resemblance to ordinary developing countries.
None of this means history is irrelevant to development. Population density five centuries ago still tracks roughly a third of income variation today. But the specific channel Acemoglu proposes, that colonialism engineered property rights depending on settlement conditions, does not survive scrutiny beyond the handful of cases that inspired it. The lesson turns out narrower, and more interesting: it was not colonialism that built the institutions associated with modern prosperity, but a particular colonial power, under a particular constitutional tradition, in a small number of places where it settled almost completely.
Both failures have fed a literature the profession may quietly be drifting toward. Research on economic freedom, security of contract, openness to trade, and low barriers to entry explains cross-country growth as well as, sometimes better than, measures of “inclusive” political institutions. Guanghua Yu’s research on Japan and China shows how open economic access can drive development absent political openness: Japan’s success owed more to institutions promoting economic access than inclusive political ones, while China’s post-1978 reforms expanded private activity and market access without political liberalization. Nor does Acemoglu’s framework explain why some countries absorb foreign technology and convert it into indigenous innovation far more successfully than others.
Consider also the reversal nobody predicted. In the 1960s, economists expected the West Indies, with their inherited British legal and parliamentary institutions, exactly the inheritance the property rights literature treats as decisive, to become the next tier of industrial success. Instead Singapore, Taiwan, and South Korea, states with comparatively young and often authoritarian institutions at the time, became the technological powerhouses of the following half century, with Singapore’s own case complicated by its status as an anomalous trading city-state. Whatever separated these trajectories, it was not a simple ledger of inclusive versus extractive rule, nor of British versus non-British rule.
Finland offers a case sitting closer to home for a European magazine, one both Acemoglu’s framework and the British-settler property rights literature largely ignore. Finland spent centuries as a Swedish possession before passing, in 1809, into Russian hands as the Grand Duchy of Finland. Even under the tsars, Finns retained considerable self-rule: their own senate, courts, legal code, and currency from 1860 onward, enough autonomy that the duchy was widely regarded as self-governing under a distant sovereign. Finland today ranks among the most prosperous and least corrupt states in the world. Whether this vindicates Acemoglu’s story, or whether retained autonomy under two non-British empires was itself the inclusive institution doing the work, remains genuinely open. What the case establishes is that the crude binary of colonizer and colonized flattens considerable internal variation, and that variation, how much self-governance a subject nation retains, may explain more than Acemoglu’s categories or a British-inheritance account allow.
Ghana supplies a case study the Acemoglu literature has generally underused. Gareth Austin’s comparison of the pre-colonial Asante kingdom and the colonial Gold Coast state shows a society with a working, if not Western, set of property rights before the British arrived: individuals owned the cocoa trees, kola stands, and gold pits they had cleared, even where underlying land belonged to a chieftaincy, and colonial courts upheld those claims, indigenous inventions the British recognized rather than colonial creations. Ghana’s wartime Cocoa Marketing Board, made permanent in 1947, was extractive by any definition, taxing farmers below world price and funneling proceeds to the state, yet that extraction handed Ghana, at independence, buoyant tax revenues and foreign exchange reserves. What happened afterward was political choice, not institutional destiny: Kwame Nkrumah’s government spent the surplus inefficiently, and the economy declined until Structural Adjustment arrived in 1983. Extraction built the capital; politics squandered it, a sequence resisting any tidy story where extraction dooms and inclusion saves.
Subnational evidence from the Americas undercuts the reversal-of-fortune thesis. Using regional data across eighteen countries, one study found pre-colonial population density is not a curse at the subnational level at all; within countries, high pre-colonial density predicts higher density and income today. Mexico City, built atop Tenochtitlán, remains among Mexico’s richest regions, and Massachusetts and California, both high-density before Columbus, are richer today than the low-density interior, notable given that the United States is itself a Neo-Britain. Colombia’s high-density regions, a case of Spanish extractive colonization, likewise remain among its wealthiest. Only Argentina and Chile show a significant reversal, and even there the explanation proves geographic accident: Buenos Aires’s rise owed more to an eighteenth-century Spanish trade decree redirecting silver shipments than to inclusive governance. Wherever data are fine-grained enough to separate agglomeration from institutions, persistence rather than reversal is the rule, regardless of colonial power.
Acemoglu’s thesis leaves too many questions unanswered. His claims depend on causal mechanisms difficult to distinguish from the economic, geographic, and historical factors that preceded and accompanied colonial rule, and the evidence sits uneasily with cases refusing to conform to the predicted relationship between settlement, institutions, and development. Rather than settling why some societies prospered while others did not, the thesis raises as many questions as it answers. It is, as The Economist gently put it, oddly unconvincing.
