raori921 OP t1_j0ypa5t wrote on December 20, 2022 at 11:58 AM

Reply to comment by elmonoenano in Why is the Spanish colonial empire often said/implied to be "less focused on trade" or "not prioritising trade" compared to other empires like the Dutch, British, Portuguese etc.? by raori921

> Spain just didn't invest in administering their territories and didn't develop them b/c there was little reason to. The wealth that could be potentially made would be concentrated into a few chosen subjects of the Crown, the Crown, and the Church.

That has a few parallels with what would be called crony capitalism today, extracting resources and exploiting labour…not really to improve the economy in the homeland let alone the colonies, but more to pay off the Crown and the Church, and anyone they saw as their favourites.

I wonder if that's also why a lot of former Spanish colonies (including the Philippines!) tend to become pretty corrupt and sometimes have dictatorships and kleptocracies where leaders resort to similar kinds of cronyism.

elmonoenano t1_j10e3v6 wrote on December 20, 2022 at 7:25 PM

I think it has a big impact. Institutions are more important for good governance than they usually get credit for. These colonies set up extractive institutions, not institutions for widespread improvement. If you read about the Spanish bank when it was developed, it was basically entirely set up to hold money and then transfer it back to the crown, or to lend it to the crown. It wasn't set up to distribute capital and create liquidity to help the economy improve, especially in the colonies. There's been some good comparisons between Dutch, English, and Spanish banking and the impact on colonial development. You can find lots of papers like this: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.econstor.eu/bitstream/10419/231550/1/49-2020-1-111-140.pdf

There was also the Banco de Isabel in the 1850s. But development economics has studied the issue quite a bit and it's worth spending a little time reading.