This project aims to study the impact of colonial autonomy on economic development through its impact on state capacity. We exploit the way that the Portuguese Empire colonized Brazil during the 16th century. In 1534, the Portuguese Crown subdivided the Brazilian mainland into several "capitanias", using straight horizontal lines to separate each capitania.
Some of the capitanias failed and were then directly ruled by the Crown for the next 300 years, while others thrived and enjoyed relative autonomy until the Napoleonic era. We exploit the discontinuity at the border between autonomous and Crown-controlled capitanias to look at the effects of colonial autonomy on state capacity, land inequality, and long-run development.
We hypothesize that autonomous capitanias had to distribute land more equally and develop better state capacity to be able to effectively control their territory, similar to the Olsen's "stationary bandits" theory.