Encomienda, the colonial state, and long-run development in Colombia

Jean-Paul Faguet, Camilo Matajira and Fabio Sánchez

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: The Spanish encomienda, a colonial forced-labour institution that lasted three centuries, killed many indigenous people and caused others to flee into nomadism. What were its long-term effects? We digitize a great deal of historical data from the mid-1500s onwards, impute prehispanic populations at municipal level, and reconstruct the Spanish conquerors’ route through Colombia using detailed topographical features to calculate their least-cost path. We show that Colombian municipalities with encomiendas in 1560 enjoy better outcomes today across multiple dimensions of development than those without: higher municipal GDP per capita, tax receipts, and educational attainment; lower infant mortality, poverty, and unsatisfied basic needs; larger populations; and superior fiscal performance and bureaucratic efficiency, but also higher inequality. Why? Mediation analysis using data on local institutions, populations and racial composition in 1794 shows that encomiendas affected development primarily by helping build the local state. Deep historical evidence fleshes out how encomenderos founded local institutions early on in the places they settled. Places lacking encomiendas also lacked local states, often for centuries. Local institutions mobilized public investment in ways that doubtless suited encomenderos, but, over time, spurred greater economic and human development.

Keywords: Encomienda; institutions; forced labor; state capacity; extraction; colonialism; development; Colombia (search for similar items in EconPapers)
JEL-codes: N36 N96 O10 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2026-03-30
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Published in The Economic Journal, 30, March, 2026. ISSN: 0013-0133

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