Preliminary version. Please do not cite or circulate Engineers, Entrepreneurs and Development in the Americas∗ William F. Maloneyy Felipe Valencia Caicedoz October 11, 2014 Abstract Using newly collected national and sub-national data and historical case studies, this paper argues that differences in innovative capacity, captured by the density of engineers at the dawn of the Second Industrial Revolution, are important to explaining present income differences, and, in particular, the poor performance of Latin America relative to North America. This remains the case after controlling for literacy, other higher order human capital, such as lawyers, as well as demand side elements that might be confounded with engineering. The analysis then finds that agglomeration, certain geographical fundamentals, and extractive institutions such as slavery affect innovative capacity. However, a large effect associated with being a Spanish colony remains suggesting important inherited factors, particularly through scientific and entrepreneurial tradition. Keywords: Innovative Capacity, Engineers, Technology Diffusion, Human Capital, Growth, Development, History. JEL: O1, O31, O33, O4, N1 ∗Corresponding author Email: mailto:
[email protected] [email protected]. We thank Steve Haber, Leo Feler, Lakshmi Iyer, Claudio Ferraz, Christian Fons-Rosen, David Mayer-Foulkes, Guy Michaels, Luis Serven, Nico Voigtl¨ander,Fabian Waldinger, David Weil, Gavin Wright and Hans-Joachim Voth for helpful discussions. We are grateful to Melissa Rubio and Mauricio Sarrias for meticulous research assistance. This paper was partly supported by the regional studies budget of the Office of the Chief Economist for Latin America and Knowledge for Change (KCP) trustfund. yDevelopment Economics Research Group, The World Bank, and Universidad de los Andes, Bogot´a, Colombia.