A Western Reversal Since the Neolithic? The Long-Run Impact of Early Agriculture

The "naive " version of the Jared Diamond-hypothesis states that regions that ex-perienced a transition to Neolithic agriculture early should be institutionally and eco-nomically more advanced than regions that made the transition later. However, within the Western agricultural core that made the transition \u85rst (Southwest Asia, Europe, and North Africa) many indicators suggest that communities that adopted agricul-ture early now have weaker institutions and poorly functioning economies than later adopters. In the current paper, we attempt to integrate both of these trends in a coherent historical framework that augments the original Jared Diamond-hypothesis. Our main argument is that countries that made the transition early also tended to develop autocratic states with a weak rule of law and pervasive rent seeking whereas later adopters were more likely to have egalitarian states with stronger private prop-erty rights. These di¤erent institutional trajectories implied a gradual shift of dom-inance from the early civilizations towards regions in the periphery. We document this relative reversal within the Western core by showing a robust negative correlation between years since transition to agriculture and contemporary levels of income and institutional development on both a national and a regional level. Our results further indicate that the reversal had become manifest already before the era of European colonization