Slave Trade and Development

Abstract

Using data for 38 countries, I estimate the impact of slave trades on individual components of GDP. I observe three important pieces of evidence that countries greatly affected by slave exports are less developed today. Firstly, I find that countries with more slave exports spend a smaller share of GDP on government purchases. This finding is consistent with Wagner’s law in that more developed countries tend to allocate a larger share of GDP on government expenditure. I also find weak evidence that these countries spend less on health and education which implies low investment in human capital in these countries. Secondly, I find that countries that exported more slaves are more dependent on agriculture. These countries have not experienced structural transformation to the same extent as developed countries. Finally, I find no evidence that countries that exported more slaves are more dependent on aid.