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The Spanish Empire and its legacy: fiscal redistribution and political conflict in colonial and post-colonial Spanish America

Grafe, Regina and Irigoin, Alejandra (2006) The Spanish Empire and its legacy: fiscal redistribution and political conflict in colonial and post-colonial Spanish America. Journal of Global History, 1 (2). pp. 241-267. ISSN 1740-0228

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Identification Number: 10.1017/S1740022806000155


The comparative history of the Americas has been used to identify factors determining longterm economic growth. One approach, new institutional economics (NIE), claims that the colonial origins of respective institutional structures explain North American success and Spanish American failure. Another argues that differences in resources encountered by Europeans fostered divergent levels of equality impacting on institutions and growth. This paper challenges the theoretical premises and historical evidence of both views offering a historicized, statistically and economically validated explanation for the institutional and economic development of Spanish America. First, it revises the structure of the fiscal system challenging the characterization of Spain as an absolutist ruler. Secondly, an analysis of fiscal data at regional levels assesses the performance of the Imperial state. It shows the existence of massive revenue redistribution within the colonies, disputing the notion of a predatory extractive empire based on endowments as the source of original inequality. Finally, we discuss how a contingent event, the imprisonment of the Spanish king in 1808, contributed to the disintegration of a 300-year-old empire. The crisis of legitimacy in the empire turned fiscal interdependence between regions into beggar-thy-neighbour strategies and internecine conflict. We conclude by arguing for a reversal of the causality from weak institutions causing economic failure to fiscal (and economic) failure leading to political instability.

Item Type: Article
Official URL:
Additional Information: © 2006 London School of Economics and Political Science
Divisions: Economic History
Subjects: F History United States, Canada, Latin America > F1201 Latin America (General)
H Social Sciences > HC Economic History and Conditions
Date Deposited: 07 Jun 2013 10:34
Last Modified: 20 May 2024 00:36

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