The cross of gold: Brazilian treasure and the decline of Portugal

Davis Kedrosky and Nuno Palma

No 18323, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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.

Keywords: Dutch disease; Resource curse; The little divergence; Portugal (search for similar items in EconPapers)
JEL-codes: N10 N13 N50 N53 N73 (search for similar items in EconPapers)
Date: 2023-07
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Working Paper: The Cross of Gold: Brazilian Treasure and the Decline of Portugal (2021)
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