The Cross of Gold: Brazilian Treasure and the Decline of Portugal

Davis Kedrosky and Nuno Palma

The Journal of Economic History, 2025, vol. 85, issue 3, 730-766

Abstract: As late as 1750, Portugal had a high output per head by Western European standards. Yet just a century later, Portugal was this region’s poorest country. In this paper, we show that the discovery of massive quantities of gold in Brazil over the eighteenth century played a key role in the long-run development of Portugal. The country suffered from an economic and political resource curse. A counterfactual based on synthetic control methods suggests that by 1800 Portugal’s GDP per capita was 40 percent lower than it would have been without its endowment of Brazilian gold.

Date: 2025
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