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22 Luis B
´
ertola and Jeffrey G. Williamson
new settler societies, on the contrary, never revealed economies of scale,
thus favoring a more equal society dominated by small and medium-size
holders. The Andean and Mesoamerican regions were characterized by
substantial native populations and a privileged few who controlled the
services of land, mineral resources, and native labor. These mineral-based
regions seem similar to tropical regions, in the sense that both generated
an economic structure where large enterprises dominated and substantial
inequality resulted. Nevertheless, the explanations for the development of
large estates are mainly institutional, and they have their roots in pre-
Colombian and colonial experience. In any case, Engerman and Sokoloff’s
great contribution is to emphasize how different societies with different ini-
tial endowments yielded different distributions of income, human capital,
and political power, all of which then influenced the extent of the market,
the development of institutions conducive to widespread commercializa-
tion, technological change, and growth.
Victor Bulmer-Thomas also deserves an important place in this dis-
cussion.
21
Like many others, he considers international demand to have
been the dynamic force during the belle
´
epoque. Differences in perfor-
mance across Latin America arose mainly from the relation between nat-
ural resource endowments, export specialization, and world demand, or
what has come to be called the commodity lottery, an idea developed
previously by Carlos D
´
ıaz-Alejandro. Given the connection between inter-
national demand and prices, on the one hand, and natural endowments
and export specialization, on the other, economic performance should have
been strongly influenced by the luck of the draw in this commodity lot-
tery. Thus, the performance of the export sector depended in large part on
demand booms and the price elasticity of demand. Economy-wide perfor-
mance depended, in turn, on the relative size of the export sector and the
extent to which the export boom spilled over into the domestic sector.
The commodity lottery is fine as far as it goes, but labor market insti-
tutions also have a profound impact on the export supply response and on
the size of any spillover to other sectors. Bulmer-Thomas treats the whole
region as labor scarce, and to deal with labor-scarcity issues he believes insti-
tutional explanations are essential.
22
For him, highly concentrated natural
21
Victor Bulmer-Thomas, The Economic History of Latin America Since Independence, chs. 3–5.
22
This view is not shared by some scholars, most notably Carlos D
´
ıaz-Alejandro, Essays on the Economic
History of the Argentine Republic (New Haven, CT, 1970); W. Arthur Lewis, The Evolution of the
International Economic Order (Princeton, NJ, 1978); and Stanley Engerman and Kenneth Sokoloff,
“Factor Endowments, Institutions, and Differential Paths of Growth.”