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Following English common law and land ownership practices, most of North America was distributed in small parcels (the homestead model). There was active participation in land markets. Immigration involved families in large numbers. The market was more important than the state. De Tocqueville commented on the optimism of American inhabitants. They invested in education and migrated across the continent. They innovated in new production techniques. There were relatively few armed conflicts and durable economic growth resulted.
This pattern is not descriptive of South America. Following Spanish colonial policy and land allocation practices, land was distributed to elites in large plots (estancias). There was limited investment in education. Immigration until the 20th century was primarily male and often short term, seasonal. There was little participation in land or capital markets and conflicts over distribution were common. The state was more important than the market. Political instability and general pessimism among the general population characterize much of South America and help to explain the diverging economic and political outcomes across the two continents. These differences are apparent even in similar areas of the US Midwest and pampas of Argentina. Property rights to land are a key source of the varying outcomes and US exceptionalism.
Gary Libecap is distinguished professor, emeritus, Bren School of Environmental Science and Management and Department of Economics, University of California, Santa Barbara; research associate National Bureau of Economic Research; member of the Research Group on Political Institutions and Economic Policy, Harvard; senior research fellow at the Hoover Institution, Stanford; senior fellow at the Property and Environment Research Center, Bozeman, Montana; and fellow of the Cliometric Society. He was Pitt Professor of American Institutions and History at Cambridge University, UK, and Erskine Fellow at the University of Canterbury, New Zealand. His research is on incentive institutions to address the losses of open access.