The Search for Spices and Souls: Religious Colonization ...

The Search for Spices and Souls: Religious

Colonization, State Formation, and Development in the

Philippines

Dean C. Dulay

Duke University

Abstract

This paper proposes a theory of religious colonization and its effects on long-

term economic development. Unlike the implicitly secular colonizers of existing

colonial origins theories, religious colonizers were motivated by religious conversion.

Conversion then implied long-term settlement and the building up of high capacity

de facto state institutions to aid the religious in their conversion goals. Competent

state institutions persisted across time, and areas with greater exposure to religious

colonization, and hence, the state apparatus, are wealthier today. This argument is

tested in the context of the Spanish colonization of the Philippines. Results show a

positive correlation between exposure to colonial institutions and various measures

of state capacity.

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1 Introduction

Conventional narratives on the colonial origins of development have convincingly argued

that institutions are a fundamental cause of long-run prosperity. But which colonial

institutions led to development? The attempts to answer this question has produced a

wealth of theories. For instance Acemoglu, Johnson, and Robinsion (2001) and Acemoglu

and Robinson (2013) have argued that the relative costs of settlement and extraction

determine inclusive or extractive institutions. Lange and Mahoney (2006) and Mahoney

(2010) have argued that the relevant schism is colonial identity; Spaniards built mercan-

tilist institutions, while British institutions were liberal. These and other theories have

yielded diverse valuable insights into how colonial institutions affect modern outcomes,

yet all these theories also share the same underlying assumption: that the colonial actor

was profit-seeking, and that this actor’s preferences are solely a function of economic

accumulation and socioeconomic mobility.

But, as historical accounts have repeatedly shown, colonialism was not a monolithic

profiteering enterprise; It was composed of different actors whose potential competing

interests may not necessarily fall into the materialist mode of colonialism the aforemen-

tioned theories presume. This paper considers the Catholic Church as a fundamental

pillar of colonialism in many countries. It further argues argues that the preferences

of these religious colonizers (and hence the institutions they chose to build) differed

substantially from their more materialistic (henceforth secular) counterparts. Given

the Church’s preeminence in colonial life, and considering the assumption that their

motivations and institutions were in fact substantially different from their secular coun-

terparts, the decoupling of the colonial state and the examination of this alternative

colonial actor—the religious colonizer— allows for the reinterpretation of large segments

of colonial history and a novel way to break apart colonial institutions within a colony.

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This paper articulates such a theory and provides evidence consistent with the theory’s

predictions. I argue that religious and secular actors constitute two distinct types of col-

onizers, animated by different motivations. These differences in motivation lead religious

colonizers and secular colonizers to create different kinds of colonial institutions. These

distinct institutions lead to a divergent relationship between within-country exposure to

colonial institutions and economic development. Secular colonizers—the implicit colonial

actor of the standard theories of colonial origins—are interested in wealth accumulation

and socioeconomic mobility. Religious colonizers are also similar in that they value both

economic accumulation and social mobility, but differ in a very important way: they are

also motivated by a religious and missionary conviction—the desire to convert believers.

The conversion motivations of religious actors compelled them to build institutions that

allowed them to achieve their conversion goals. Specifically, they instituted a system of

standardized, impersonal revenue generation, and created public goods that minimized

transactions costs and increased human capital. This bundle of institutions served as

a de-facto missionary state, and correspond to what other scholars may consider in-

stitutions conducive to long-run development. The standard theorizing then applies:

exposure to the state-like institutions of religious colonization led to greater develop-

ment today. This religious model” of colonization can thus be stated succinctly: the

religious desire for conversion led to the necessity of long-term settlement, hence cre-

ating the need to build up state-like institutions that benefited the missionaries in the

long-run and allowed them to engage in the long-term process of conversion. The insti-

tutions of the missionary state persisted across time, and areas with greater exposure to

the missionary state having higher levels of development today.

This paper examines the above claims in the context of the Spanish colonization of the

Philippines. This context is a particularly appropriate setting in which to test the theory.

First, the structural characteristics of the country—its distance from Spain, inhospitable

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geography for foreigners, low population density—and the Spanish colonial legacy all

point towards colonial expansion and settlement being too costly for seculars. This was,

in fact, the case. Most seculars stayed in the capital city of Manila to engage in trade,

leaving the nuts and bolts of colonization to the Spanish missionaries. This implies that

colonial institutional design was determined by religious colonizers. Second, the religious

colonization of the Philippines implied a fundamental restructuring of precolonial life,

replacing small villages based on kinship ties to a missionary led and influenced de facto

state. This implies that colonization was a decided reconfiguration of the country’s

institutions. These circumstances provide us with an empirical setting where we can

observe the effect of a substantial reorganization of precolonial society into a missionary

state with minimal intervention from seculars, thus potentially providing us with as clean

a test of the “Religious Model of Colonization” as possible.

The implications of the argument guide my empirical analysis. In particular, the religious

model of colonization lends itself to, and is consistent with, two testable hypotheses. The

first hypothesis is that exposure to religious colonial institutions is positively correlated

with economic development. The second hypothesis is that the state institutions built

up by the missions, in particular the high capacity missionary states, mediates the

first hypothesis. Therefore, exposure to religious colonial states is positively correlated

with contemporary levels of state capacity. The primary identification concern is the

endogeneity of mission settlement. The research design therefore leverages the idea that

missionary settlement during the first few years of colonization and close to the main

ports of arrival may have been as-if random, and uses this subset of missions as an

instrument to address the endogeneity concern.

This paper contributes to the literature in several ways. Most directly, it proposes a

theory that splits the colonial state into its constituent parts and emphasizes the impor-

tance of examining the role of religious actors during colonization. While the importance

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of religion and the influence of religious actors like the Church and the missionaries is

well-documented in many historical studies. In both the colonizers’ countries and the

countries they came to dominate, these actors are practically absent from the leading

theories on the colonial origins of development, which tend to compress the complex

and varied motivations of the many different actors that made up the colonial enterprise

into a simplified wealth maximizing colonial state. While useful, this simplification does

not specify the important actors within the colonial enterprise and hence leaves some

variation unexplained. This paper begins to address this shortcoming.

Moreover, as noted above, religious actors comprised a key pillar of colonial states all

around the world. The theoretical logic presented here can therefore be used to analyze

religious actors in other countries as well. How did the interplay between secular and

religious actors affect the final form of the state? Do resource-rich colonies face greater

secular state expansion while resource-poor colonies do not? For poorer countries, if the

religious colonial institutions were unencumbered by secular forces, do we see develop-

ment patterns similar to that of the Philippines? The theory presented here serves as a

springboard by which these questions may now be asked.

Finally, this paper contributes to a growing literature on the importance of religious

missions in shaping economic and political life. Recent papers by Valencia (2018) and

Waldinger (2018) both posit a relationship between missionaries and level of education

in colonial Latin America. In the political sphere, an influential paper by Robert Wood-

berry (2012) argues that the presence of protestant missions is positively correlated with

more democracy in the former colonies. While these papers have convincingly argued

for the role of missionaries in economic and political development, they mostly treat

religious missions as separate from the state-building process. I extend their argument

by conceptualizing colonial missions as state-builders in their own right, and education

provision as just one thing that states do.

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2 The Religious Model of Colonization

This section expounds on the “religious model” of colonization. The model is proposed as

an alternative (but not mutually exclusive) theory of colonial expansion and institution

building, positing a causal story beginning with the motivations of religious colonizers,

as distinct from the implicitly secular colonizers of most existing theories, and ending

with implications for development.

The gist of the theory is simple: secular colonizers are motivated by economic wealth

accumulation and social mobility . Religious colonizers are motivated by economic and

social gain as well, but differ from their secular counterparts in that they are also (and

potentially primarily) driven by religious motivations (the God motivation), which is

essentially the desire to convert natives to the faith of the religious colonizers. Con-

version is a long and difficult process, requiring that religious colonizers stay in their

newly colonized areas for long periods of time. This process of long-term settlement

thus requires the building up of institutions that will aid them in accomplishing this

conversion goal. The perceived long time-horizon, and the political and economic stabil-

ity required to maximize long-run religious colonizer utility, was the mechanism that led

them to develop a state institutions that provided legibility of the local community, a

standard system of taxation, and large-scale public goods provision, among other things.

The institutions that religious colonizers built up correspond to what political scientists

call capable states. These capable states then served as the catalyst for increased and

persistent economic development.

The rest of this section proceeds as follows: It begins with a review of some leading

institutional theories on the colonial origins of development, as well as the literature on

colonial missions, and argues that both literatures do not sufficiently outline a religious

model of colonization. It then moves on to more fully articulating the missionary model

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of colonization.

2.1 Institutional Theories, Religious Missions, and the Colonial Ori-

gins of Development

A variety of theories have emerged over the past few decades attempting to articulate

the long-run determinants of economic development. Well-known theories postulate

that factor endowments (Engermann and Sokoloff 2000) or geography (Gallup et. al.

1999, Diamond 1999) are the primary long-run factor explaining modern development.

While these factors undoubtedly had a role to play, this paper proposes a (religious)

institutional theory of colonial origins. Hence we will focus on existing institutional

theories of long-run development, that is, theories that posit that institutions are the

fundamental cause of long-run development. There are two major strands of institutional

theories of development: the first strand emphasizes demand-side characteristics, such

as the potential for settlement or extraction, while the second strand focuses on colonial

identity, and the modes of colonization that differ between colonizing nations, as the

typologies that bring about variation in countries’ levels of contemporary development.

We consider both in turn.

A research agenda by Acemoglu and Robinson (2005, 2013), along with their 2000 and

2001 papers with Simon Johnson, proposes a demand-side theory of variation in colonial

institutions. They argue that the relative costs of settlement and the potential for

extraction determined whether colonizers established rent-seeking extractive institutions,

or inclusive institutions that protected property rights and promoted long-run growth.

According to their theory, richer, more population dense areas were more easily converted

into extractive institutions, where colonizers could use the relatively dense population

as cheap labor to employ strategies such as tributes or corvee. In poorer, less-population

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dense areas, the costs of building these extractive institutions were high, and colonizers

were more likely to engage in building market-supporting institutions. Prospects for

long-term settlement also determined institutional quality. The difficulty of settlement,

for example because of high mortality rates, increased the relative benefits to building

extractive institutions. The converse is also true: greater potential for settlement made

colonizers more likely to build inclusive institutions. They then claim that extractive

and inclusive institutions persist, with extractive institutions leading to lower levels of

modern development, and inclusive institutions positively correlating with development.

Lange et al’s (2006) theory on colonizer identity provides an interesting contrast to the

Acemolgu-Robinson thesis, emphasizing instead that it is the identity of the colonizer

nation—in this case the Spanish versus the British, and the modes of wealth accumula-

tion associated with each—that drove institutional variation and economic development.

In their view, Spain implemented a “mercantilist model” of colonization, settling in areas

with high levels of precolonial development and imposing exploitative labor institutions,

trade restrictions, and protected guilds, in essence creating a small class of elites who

generated rents at the expense of the rest of the population (in the parlance of Acemoglu-

Robinson, these would be called extractive institutions). The level of exposure to these

exclusionary mercantilist institutions is then negatively correlated with development.

They juxtapose this to the “liberal model” associated with British colonialism—British

colonizers settled in areas of lesser precolonial development, where they had a better

opportunity to restructure the existing order. This restructuring gave way to a system

that upheld property rights and the rule of law, ultimately towards the better function-

ing of free markets. The level of exposure to these inclusive liberal institutions is then

positively correlated with development.

While both papers have been influential and have greatly enhanced our understand-

ing of the long-term effects of colonization, they both presume a monolithic colonial

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entity, what I call the secular colonizer, whose interests are implicitly a function of self-

interested economic and social improvements—the desire to enrich themselves, or the

desire for improved social status. The conceptual dilution of colonizer preferences to

the homogenous secular agent is inconsistent with the history of the colonial period and

leaves out important variation as agents within the empire vied to exert their preferences

and sought to build institutions consistent with this desire.

The religious colonizer, whose motivations were the desire for conversion of the natives

and the long-term settlement required by the conversion process, represents an obvi-

ous counterpoint to the purely profiteer motivations of secular colonizers. The opera-

tionalization of religious colonization was accomplished through missionaries—members

of religious orders whose primary task was religious conversion in the frontiers of the

world.

A growing literature has acknowledged that missions were an important, and distinct,

actor during the colonial period, and this growing agenda is itself testament to the dis-

tinctiveness of religious colonizers as influential actors in their own right. Several papers

in this literature argue that missions build schools that led to persistent improvements

in human capital. Valencia (2018) and Waldinger (2018) both show that the presence

of various religious missions in Latin America is correlated with modern levels of edu-

cational attainment. These results are consistent with the missions literature in Africa

by Nunn (2010), Fourie and Swanepoel (2015) and Wantchekon et al (2015), which all

document a positive correlation between missionary schools and higher levels of contem-

porary education. Woodberry (2012) has argued that missionaries have also influenced

contemporary politics. He shows through cross-country analysis that the presence of

protestant missionaries is positively correlated with democracy.

I argue that while these studies understand the importance of religious colonizers, they

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conceptualize missionaries as separate from the apparatus of the colonial state and in-

stitution building. This does not go far enough. Religious missions were colonizers in

their own right, and built up institutions as a natural consequence of their preferences

and motivations. Theirs were not just institutions for improvements in human capital,

but the necessity of their conversionary mission, long-run settlement, and drastic reor-

ganization of precolonial life led them to build much more fundamental institution, the

contours of the state itself.

2.2 A Theory of Religious Colonization

This section articulates a theory of religious colonization, beginning with the preferences

of religious colonizers, the institutions they build in accordance with these preferences,

and the relationship between institutions and economic development. It is important

to note that this paper does not fully outline the distinctions between religious and

secular models of colonization; it focuses on outlining a theory of religious colonization,

tests the empirical predictions of the theory, and uses historical examples and insights

from the extant literature to note relevant departures from secular modes of coloniza-

tion. Furthermore, the theory is highly stylized, and intentionally so, to emphasize the

preferences and subsequent institutional choices of religious colonizers.

The relevant actor in this theory is the religious colonizer. In practice, religious colo-

nization was undertaken by missions, and hence in actuality, it was missionaries who

engaged in the nuts and bolts of colonial expansion and institution-building. These reli-

gious colonizers were similar to their secular counterparts in key ways—they also cared

about economic accumulation and social and economic mobility. But they differed from

seculars in one important respect. Religious colonizers were interested in religious con-

version, that is, to persuade the natives to align their religious beliefs with that of their

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colonizers. I call this the conversion motivation, and argue that the desire to convert

natives affected the colonizers in two ways: first, they derived spiritual utility—the in-

trinsic benefits that they received by converting natives to the correct faith and giving

them salvation, and worldly utility—the social benefits, such as self-esteem within the

religious order and society at large, that missionaries derived from converting natives and

sitting at the top of the colonial political hierarchy, as well as the economic rents from

tributes, tithes, and other modes of rent-seeking. The theory, then, is agnostic towards

whether spiritual or worldly motivations were more important to missionaries. Both

mattered. And as will be argued, both lead religious colonizers to create a particular

kind of institution.

Spiritual and worldly utility implied that religious colonizers had to settle for long periods

of time in the areas they were trying to convert. Long-term settlement was necessary

for spiritual utility because converting the hearts and minds of natives took time. This

implies more than just a superficial adherence to the rituals of religious life, such as

attending mass every Sunday, but a deeply-held belief in religious theology. The notion

that missionaries considered conversion to be a long-term project is apparent from the

strategies they took to convert locals, such as the education of children in the doctrines

of the faith—a process that took years to complete.

Similarly, the worldly utility that missionaries derived from conversion implied costly

settlement as well. First, they derived utility from being at the top of the local political

and social hierarchy. Most missionaries, especially those that went to far-flung places

like the Philippines, were from relatively poor families, and within their order were not

held in high esteem. The opportunity to go from relative obscurity to localized despot

corresponded to a massive increase in social status. A similar social mobility dynamic

occurred with the missionary’s status in the religious order. Missionaries gained social

esteem within their religious order if they were able to successfully convert natives.

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Finally, the missionary stood to accrue substantial economic returns from the religious

practices, such as from the administration of the sacraments and the collection of tithes.

These sources of worldly utility also required long-term settlement. While in many

cases missionary incomes were augmented by traditional sources of revenue collection,

a substantial amount of their economic rents were a function of their religious duties,

such as tithing during Sunday mass, or when they administered the sacraments, as

mentioned above. Note that this mode of economic rent-seeking is different from secular

rent-seeking. Seculars did not have to live in the locality that they were extracting, as

long as they had an apparatus for coercion in that place. The missionaries had to live in

the area due to their conversion duties, and hence used their religious responsibilities as

de facto rent seeking tools. Furthermore, the social benefits that missionaries received

from both native society and their peers within their religious communities required long-

term settlement in the colonized area. To gain the esteem of their peers, they needed to

convert; to claim the benefits of being at the top of society they had to actually be in

that society.

The above discussion implies that the benefits that religious colonizers gain from colo-

nization, be it of the spiritual or worldly variety, require long-term settlement. In this

sense, the theory is similar to the model of Acemolgu and Robinson (2002), which posits

that greater settlement potential leads to more inclusive institutions, because the colo-

nizers utility then becomes a function of the long-run benefits of the improvements in

society. The theory is also similar to the stationary bandit model of Olson (1993), which

implies that colonizers’ certainty of ownership” over the local society that they inhabited

incentivized them to invest in the long-term prosperity of their domain. The theory im-

plies that religious colonization and long-term settlement go hand-in-hand; missionary

goals of religious conversion and indoctrination are fundamentally long-term projects,

and the utility benefits of conversion take time to accrue.

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The question then turns to the kind of institutional structure that allow religious coloniz-

ers to achieve their spiritual and worldly goals. The theory proposes that these colonizers

built up a bundle of institutions that, taken together, constitute a de-facto state, and

that the imposition of these state-like institutions constitutes a substantial increase in

state capacity. The colonial state enhanced state capacity in three major ways: first,

conversion required knowing who to convert, and knowing whether these natives engaged

in the doctrinal activities required of conversion; hence religious colonizers improved the

monitoring and informational capacities of the state, often learning the native language

in order to do so. This led to improvements in state legibility. Second, religious colo-

nizers needed to generate revenue in order to fund the the long-term conversion project.

They needed to build schools and churches to spread the faith, as well as roads and

town hall buildings to stimulate market activity, potentially for greater long-run revenue

extraction. This led to improvements in state revenue generation. Finally, these public

goods—schools, churches, roads, and the like—implied greater provision capacity.

The theory assumes that improvements along state legibility, state revenue generation,

and state provision were substantial enhancements over the state capacities of precolonial

society. It assumes that precolonial societies did not have third-party, formal monitoring,

a standardized system of revenue generation, or the capacity to engage in public goods

projects. While there were certainly exceptions, this assumption makes conceptual sense.

Exploration into the frontiers of society were part and parcel of the religious mission.

History tells many tales of religious missionaries traveling to far-flung areas to undertake

the goal of religious conversion. Relatedly, the richer, more population dense places—

presumably also places with higher levels of state capacity—were more likely to be taken

over by the secular state, and hence be subjected to secular, not religious, colonization.

Finally, the theory argues that improvements in state legibility, state revenue generation,

and state provision capacity imply more competent states that persisted across time

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and serve as a primary causal mechanism towards economic prosperity. In other words,

greater exposure to religious colonial institutions is positively correlated with economic

development. The extant literature supports this view. Legibility is a prior of both

provision and revenue generation. Revenue generation and provision, in turn, are clearly

linked to three specific channels connecting state capacity and economic development:

transport infrastructure, social spending and education (Dincecco 2017). The missionary

state provided all three: infrastructure as a means to lower transaction costs and to

stimulate markets, education as a means for conversion, and social and welfare spending

as the fulfillment of the theologically-driven concern for the poor. The predictions of

this theory are thus consistent with the following testable hypotheses:

H1: Religious Colonial Exposure and Development Exposure to religious

colonial institutions is positively correlated with economic development.

H2: Religious Colonial Exposure and State Capacity Exposure to religious

colonial institutions is positively correlated with state capacity.

It is worth noting that apart from the testable hypotheses, the theory makes several

implicit claims: (i) the formation of religions institutions corresponded to the begin-

nings of de-facto statehood, (ii) these states were a product of religious, and not secular,

motivations and preferences, and (iii) state formation by religious colonizers constituted

a significant increase in state capacity. While I do not test these claims empirically, the

next section presents historical evidence that these claims are met. Furthermore, these

claims assume a relevant scope condition: a precolonial society with relatively low state

capacity. It therefore may not be generalizable to cases where the precolonial society

had institutions that rivaled the institutions that rivaled that of religious colonization.

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Figure 1: A Theory of Religious Colonization

The theory of religious colonization can be summarized as follows (see Figure 1): Reli-

gious colonizers are motivated by the goal of religious conversion, as well as economic

accumulation and social and economic mobility. The necessity of religious conversion

makes religious colonizers fundamentally different from their secular counterparts, who

are solely concerned with economic and social well-being. Religious conversion increased

religious colonizer utility in two ways: an increase in spiritual utility form convert-

ing natives to the “correct” faith, and an increase in worldly utility from the stream

of revenues—such as payments for the sacraments and tithing—that only come with

conversion, and through the social benefits that these colonizers accrued from their re-

ligious order and society at large. Conversion was a long-term process, and required

long-term settlement. This, in turn, required institutions that allowed religious coloniz-

ers to convert the population, generate stable long-term streams of revenue, and provide

the natives with public goods. The religious colonial state provided them all. This led to

improvements in state legibility, state revenue generation, and state provision. In other

words, religious colonizers built up competent states. These competent states persisted

and were the key mechanism linking exposure to colonial institutions with economic

growth today.

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3 Institutional Context: The Philippines as a Case Study

Spain colonized the Philippines by accident. Spanish ships sailed to Asia in an attempt

to monopolize a potentially highly lucrative spice trade that stretched from a group of

islands of what is now modern day Malaku in Indonesia. Commodities such as pepper

and nutmeg fetched an exorbitantly high price on the European market, and were valued

all over the world at the time. Hence control over the “spice island” trade route could

potentially lead to large revenues for both Spanish merchants and the Spanish crown. It

was trade and profits that brought the Spaniards to Asia, and it was on route to Malaku

that the Spaniards “discovered” the Philippines.

The precolonial Philippine islands featured governance structures that were vastly dif-

ferent from the politically centralized states of their soon-to-be colonizers. In fact, the

islands were not a centralized state at all. The vast majority of the country was com-

posed of small villages, usually numbering a few hundred at most. These villages were

composed of what can be called a very extended family, with the local chief serving as

the head of this patrimonial society. The small size and patrimonial nature of these vil-

lages meant that basic state functions—the rule of law, standardized taxation, or a third

party provider of public goods—were not necessary. Collective action and enforcement

by the chief were usually enough.

There were, of course, exceptions to this patrimonial, village structure, but these ex-

ceptions were few and far between. The most notable exception was the sultanate in

Sulu, in the south of the country. Sulu was politically institutionalized, with author-

ity flowing from the sultan. The sultan would appoint a local district administrator,

called a panglima, to collect taxes, adjudicate disputes, organize labor, and announce

royal decrees”. Sulu also had the military capacity to defend its territory, thanks to its

proximity to and relationship with more powerful sultanates in Borneo and Indonesia.

In other words, Sulu was a state. The other exception was Manila in the north. Most

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historical records imply that Manila was a nascent sultanate, where the very beginnings

of political centralization, and prerequisites such as the ability to write, were taking root

at the time of Spain’s arrival. Its nascence should be emphasized, and as a local leader

referring to Manila, mentioned “there is leader in these islands” (Abinales 2005). Sulu

and Manila are exceptions that prove the rule. Both limited in scope, and with Manila

being of relatively low state capacity by European standards, the country as a whole

displayed an absence of state structures and capacities.

The islands’ factor endowments were also a poor fit for Spain’s mercantilist style of

colonialism. Resource-poor, riddled with tropical diseases, and home to a sparse pop-

ulation, there wasn’t much that attracted Spanish colonialists to the country. But the

one thing that was attractive proved very attractive. The Philippines was well-situated

as an entrepot, or port, where goods from China, such as spices and porcelain, would

be sent to Acapulco, in exchange for silver. This galleon trade took advantage of pre-

existing relations between the Philippines and Ming China, and provided the Spanish

American and European markets with Chinese goods. Two factors: the combination

of an island whose natural endowments were difficult to extract, and the opportunity

to benefit from a lucrative galleon trade, pushed secular colonizers towards engaging in

trade. This meant that secular colonizers stayed in Manila, the sole port for the galleon

trade. Trade was also stable, and lasted for almost 300 years, from 1565-1815. The im-

plication is that secular Spaniards who came to the Philippines had both lucrative and

stable business opportunities through trade, making the venture of colonization costly

and unworthy of their time.

While seculars didn’t find much reason to colonize the country, Spain’s religious mis-

sionaries certainly did. Religious orders—the Jesuits, Franciscans, Dominicans, Augus-

tinians, and Recollects—with the help of Spanish soldiers, took the lead in the nuts-and-

bolts of the Spanish colonization effort, that is to say, the actual act of colonization—

establishing control over an existing society. Seculars did not have much reason to

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protest; they benefited from the tributes that the missionaries would collect on behalf

of the Spanish king without having to actually put in the work to institute a system for

tribute collection.

Religious colonizers enforced their authority on native society through a combination of

coercion, manufactured legitimacy, and the cooptation of the existing elite class. Spain’s

technologically superior weaponry allowed them to dismantle local resistance relatively

easily. But the religious colonizers took a hearts-and-minds approach to colonization.

Their political and religious legitimacy was granted credibility by their ability to do two

things: (i) adopt Catholicism to the local practices, and (ii) coopt the existing elites (the

immediate family of the chief) by offering them mutually beneficial arrangements. Native

Filipinos were pagans who worshipped physical objects in nature. A clever middle-

ground was the introduction of idols and physical symbols with metaphysical power—

such as physical statues of the Santo Nino (Baby Jesus) and the Virgin Mary. Another

example was the provision of a “magical” amulet called an anting-anting, which gave

special powers to its owner “in imitation of the Spanish friarship”. Ileto (1997) explains

how the anting-anting was obtained:

[One] way... was to go to the cemetery on midnight on Holy Wednesday or Thursday

and place bowls of food, a glass of wine, and two lighted candles on a tomb. Before the

candles burned out, the food and drink would have been consumed by spirits who would

leave a white stone in one of the empty vessels. A struggle for the possession of this

anting-anting would then ensue between the aspirant and the earth-spirit called lamang

lupa. Only extraordinarily brave or daring men used this method; these were the ones, it

is said, who usually became rebel or bandit chiefs.”

The religious colonizers also coopted the local elites. Conditional on exerting force and

controlling these areas, missionaries often gave the local elites special privileges—such as

exemptions from taxation and manual labor, and political power under the new Spanish

institutions. In return, these elites were given fundamental tasks related to reorganizing

18

society, such as collecting tributes and convincing the people in the village to accept

Spanish rule and institutions.

3.1 Religious Colonization as a de-facto State

This subsection provides historical evidence for many of the theory’s important assump-

tions. Specifically, I focus on these particular claims: (i) the formation of religions

institutions corresponded to the beginnings of de facto statehood, (ii) early states were

a product of religious, and not secular, motivations and preferences, and (iii) state for-

mation by religious colonizers constituted a significant increase in state capacity.

First, I claimed that religious colonization, which in the Philippine case corresponds

to the founding of a Catholic mission, coincided with the beginning of state construc-

tion. Historians of the Philippines support this assertion. Dumol (2010) argues this

view explicitly, claiming that the establishment of parish churches by missionaries was

synonymous with the establishment of municipalities (towns):

“The statistics on the foundation of parishes are statistics on the foundation of towns...In

effect, the history of Christianity in the Philippines would be not only the history of the

spread and assimilation of a new religion, but also the history of how the oldest municipal

communities that we have today, that are the political, economic, and cultural nerve

centers of the Philippines, were founded.”

Consistent with the theory, they claim that the missionary-led colonization project im-

posed a political structure on the natives; this political structure was granted permanence

by the building of physical infrastructure, which implied that the religious conversion

process was also a process of building a permanent, defined settlement. The passage

below from Stanley Karnow (1989, pp. 51-52), is instructive:

“To tighten their grip over the natives, whose scattered villages were autonomous, they

built pueblos, or townships. Their centerpiece in the town, located in the main square,

was a large stone church...Thus, as the phrase went, they brought the population debajo

19

de las campanasunder the bells”.

The theory also claims that most of the states that were built up were distinctly mission-

ary states, a product of a religious mode of colonization, and that the seculars mostly did

not involve themselves with the process of state-building. In principle, state construction

could have been a mostly secular affair, with missionaries relegated to religious teaching

while the actual task of political rule was left in the hands of secular state officials. This

was not the case. Abinales (2017, pp.66-67) says:

“the secular state was weak in personnel, its power did not flow evenly through the

territory it claimed, and it remained extremely dependent upon the friars for most of its

basic functions...

...the local friar (missionary) acting as parish priest was frequently the only Spaniard

Indios ever saw. He spoke their language, heard their confessions, enforced collection of

the tribute, and provided some protection from excessive taxation”

He puts this succinctly: “In much of the Philippines, the friars were the state”.

Why did the theoretical power of the secular state not translate to power in practice?

Part of the reason was the shortage of secular Spaniards willing to venture to the Philip-

pines. The country was too far and not worth the dangerous and costly travel given the

lack of resources and meager economic returns. To put this into perspective, between

1624-1634, only 60 non-clerical Spaniards were present in the whole country. The nuts

and bolts of state construction therefore fell to missionaries. Consequently, the mission-

aries’ knowledge of the local context and local influence, as well as the relative financial

independence they possessed through the generation of revenues from religious activity,

made secular leaders dependent on them. When Spain’s governor in the colony issued

an order, the missionaries would simply refuse to submit to his authority. Because he

lacked personnel or any semblance of state capacity. The governor had to submit to the

missionaries’ wishes.

This relationship between religious and seculars can be summarized as mutually benefi-

20

cial. The missionaries engaged in the necessary task of state-building, while the seculars

could focus on profits from the galleon trade. Abinales (2017, p. 67) captures this

sentiment well:

“the many useful functions (missionaries) performed for the state—from maintaining

order and guaranteeing tributes to acting as policy advisers and foreign envoys—relieved

state officials of the need to develop these capacities, allowing them to concentrate on

galleon profits.”

Finally, I argue that missionary exposure and the formation of the state led to significant

increases in legibility, revenue generation, and provision. First, we need to consider the

structure of Philippine pre-colonial society. Many parts of precolonial Philippine society

were composed of small villages held together by kinship bonds. This meant that there

was no incentive to create bureaucratic monitoring, a system of rule-based extraction,

or provide (long-term) public goods; the small population and kinship ties furthermore

withheld the need for state capacity to keep track of the village’s members.

This organization was a product of the smallness of the precolonial villages; everyone

knew everyone else, hence there was no need for census-taking. Furthermore, the re-

peated social interactions that characterize groups of small size represented a dynamic

game where social sanctions, through the spreading of information, were an enforcement

mechanism that prevented free-rider problems in public goods provision. This implied a

system of social and political order without formal governance structures (Ellickson).

Historians provide support for these claims. Corpuz (1989, p. 37), says of the Visayans,

a group of people from the central Philippines already thought to be among the more

“advanced” natives: “their language is crude and less developed. They do not have so

many words of refinement, because they did not have the art of writing”. This stems

from the fact that their underlying system of governance, according to Chirino (1595),

was based on “tradition and usage...preserved in songs that are committed to memory”,

further evidence that basic epistemological functions of the state did not exist. Relatedly,

21

there were no written laws. The rules of the village were decided by the whims of the local

chief, and were therefore neither consistent nor invariably applied for a given infraction

or disagreement (Corpuz 1989, p.38)

The manner of public goods provision in the Philippines also differed starkly from the

centralized, rule-based taxation and public goods provision that characterizes the mod-

ern state. First, the physical infrastructure of public goods by and large did not exist.

For example, there was no need for schoolhouses, since the knowledge of rituals and

traditions were simply passed along orally. Second, public services such as land prepa-

ration, planting, and harvesting were provided cooperatively (Corpuz, p.16). The small

size of the communities ensured compliance. This form of cooperation was so central to

how precolonial society functioned that there is a word for it: bayanihan—cooperative

labor among neighbors and kinfolk.

The imposition of the Spanish missions therefore led to fundamental improvements in

state capacity. Legibility improved greatly. From oral traditions and decree by local

chief, the missions established written rules and codes of conduct—the rules of the

Spanish king and the rules of the Church. In practice these rules were still at times

subject to the whims of the local missionary, but the doctrine of Christian life did

make the natives’ behavior subscribe to, and hence understandable to, the missionaries.

Moreover, in 1591, the first census was conducted. The census was a clear attempt

at legibility—the breadth and depth of the state’s information about its citizens. The

census was supplemented by the ecclesiastical records of the missionaries. Priests were

required by canon law to record all baptisms, confirmations, and burials (Newson 2009).

These ecclesiastical records further strengthened legibility.

These improvements in legibility then led to improvements in the capacities for revenue

generation and provision. The census and ecclesiastical records were a necessary step

in monitoring the population, and both served as the basis for tribute collection and

corvee labor. The imposition of tributes and labor represented a stark change from

22

“bayanihan” style cooperative labor that was common in precolonial society1. Public

goods provision was very much apparent, with the building of physical infrastructure

such as Churches, roads, and schools. This was also a significant change for all but the

most technologically advanced and population dense places in the Philippines, such as

Jolo and Manila.

4 Variables and Data

While the institutional detail and qualitative evidence in the previous section is con-

sistent with the theory, unobservable factors and the nonrandom nature of recorded

historical events prevents us from making a more systematic empirical assessment. The

next two sections therefore outline the data needed to perform the statistical tests and

empirically validates the theory’s main hypothetical claims.

4.1 Dependent Variables

H1 claims that exposure to religious colonial institutions—in the Philippine case mission-

ary exposure—is positively associated with modern economic development. Most studies

in the deep roots of development literature employ GDP per capita or the growth rate

of GDP as a proxy for the wealth of a country or region (Engerman and Sokoloff 2000,

Acemoglu, Johnson, and Robinson 2001, 2002). I cannot use GDP as a measure of

wealth because this data is not available at the municipality level, a constraint that is

especially relevant in the developing world.

I instead use night light luminosity as my main measure of local economic prosperity.

This measure is now commonplace as a measure of economic growth, both within and

across countries (Pierskalla et al 2018). Moreover, night time lights have been shown to

be very highly correlated with traditional measures such as GDP (Elvidge et. al. 2002),

1Slave labor existed in these precolonial societies, but were much less common in scope, mostlybecause of the fragmented nature of precolonial life

23

and especially advantageous for measuring output at the lowest levels of development

(Chen and Nordhaus, 2011, Pierskalla et al 2018).

I employ night lights data from the Defense Meteorological Satellite Program’s Opera-

tional Linescan System. Luminosity intensity scores are scaled from 0-63 for each square

kilometer. To obtain a luminosity score for each municipality, I obtain the unweighted

average of each grid cell at least partially within the boundaries of the municipality. As

a robustness test on this measure I (PLAN TO) do two things: (i) use an alternative

measure of luminosity, and (ii) calculate the municipal luminosity score only using grid

cells that are completely within the boundaries of the municipality.

H2 posits that legibility, extraction, and provision were the three elements of state

capacity that mediated the relationship between missionary exposure and development.

State legibility is assumed to be a prior for both revenue generation and public goods

provision. I operationalize revenue generation by using tax revenues per luminosity unit.

Tax collection is commonly employed as a measure of the state’s ability to generate

revenue. Standard measures used to measure revenue generation include the tax-to-

GDP ratio (Dincecco 2017) or the ratio of income taxes to total taxes. Unfortunately,

local GDP data is not available for the Philippines. Hence tax revenue per luminosity

unit serves as a proxy for state capacity. One concern is that revenue collection depends

on the policy goals of the current local government, and hence may lead to substantial

variation in revenue collection per year. I (PLAN TO) alleviate this concern by taking

the average per luminosity unit revenue collection for each of the years in my data,

from 1992 to 2014. The data on revenue comes from the Bureau of Local Government

Finance.

Finally, I use road density and the number public schools per capita as a measure of pub-

lic goods provision I choose these variables for two reasons. The first is conceptual: the

Catholic church built up both a physical infrastructure to resemble the Spanish town,

as well as educational institutions for religious instruction. These variables therefore

24

represent the continuation of the particular types of public spending that the Church en-

gaged in. Second, both infrastructure and education can plausibly be linked to economic

development, for example through the lowering of transactions costs to market exchange

and improving human capital, respectively. Road density is calculated as the length (in

kilometers) of road divided by the land area of the municipality. This data is available

from the PhilGIS, an online repository of GIS data made available by the Philippine

government. Public schools per capita is simply the total number of elementary and

secondary schools divided by the latest municipal population. I obtained this data from

the Department of Education (THIS IS NOT YET TESTED).

4.2 Independent Variable of Interest

The key independent variable of interest is a measure of missionary exposure. The year

a mission settled in a current-day municipality is a suitable proxy for the beginning of

statehood in that municipality. I employ a novel dataset compiled by Javellana (2010),

which chronicles the year the first mission settled in each municipality, dating back to

the beginning of Spanish colonization in 1565. I subtract the mission year from the year

of the outcome variable to obtain my missionary exposure measure.

4.3 Control Variables

The fundamental endogeneity concern is the non-randomness of mission settlement (Jed-

wab, et al). Recent work on the economic effects of religious missions explicitly note

that mission settlement depended on various factors, such as the potential of an area

for agricultural production, the geographic hostility of an area to colonizers, and the

distance of the locality from the capital. Failure to account for these confounding fac-

tors would bias results. In the analysis, I refer to three different categories of control

variables—geography, climate and location.

My geographic controls include Riley et. al.’s (1999) measure of terrain ruggedness,

25

distance from the coast, and six measures of soil quality from the Harmonized Soil

Database (2102). These measures correlate with the potential for agricultural settlement

and population density, which in turn affects missionary exposure. The missions chose

places where they could settle over the long-term. Conversion and indoctrination took

time, and missionaries benefited by settling over an area and ruling over it. These

measures also correlate with the difficulty of entering an area. Places that are rugged and

distant from the coast may be also be more difficult to get to, given their distance from

the capital or their inhospitable terrain. Furthermore, these places, given their distance

from the coast, and therefore from contact with foreigners, may be more reluctant to

deal with colonizers (Waldinger 2018).

My climatic controls include mean monthly precipitation and mean monthly tempera-

ture. Like my geographic controls, these climate controls correlate with the potential for

settlement and the ability to produce agricultural crops. Places with too little rainfall

or that are too cold may not be suitable for settlement, hence both precolonial natives

and colonizers would be unwilling to settle there.

Finally, my location controls include distance from Manila, distance from Cebu, and dis-

tance from Jolo. Manila and Cebu were the initial settlements of the Spanish colonizers

and were areas with relatively large precolonial populations in their own right. Jolo was

the capital of the Islamic sultanate in the south of the Philippines, and by many accounts

had the most politically complex organization by the time the Spaniards arrived at the

Islands.

Distance from Manila and Cebu serve as important proxies for various measures: first,

transportation costs increase with distance form these places, which served as the starting

point of most missionaries, who made their way from these capital areas to the periphery.

Higher costs of travel meant that, all things equal, missionaries would be more likely

to settle in places closer to the capital. Second, I assume that population density is

decreasing in distance from Manila and Cebu. The further away one went from these

26

populated areas the less dense the populations tended to be, since this would also imply

movement away from the coast and from precolonial trade destinations.

Distance from Jolo implied distance from the Islamic sultanate. This measure serves

as a proxy for the influence of Islamic institutions on precolonial political institutions.

This matters for two reasons. First Islamic institutions have notable long-run effects

on economic development (Kuran 2010). Second, the sultanate in Jolo was militarily

capable and was antagonistic towards the colonizers. Therefore, the closer to Jolo an

area was the more difficult it was for colonizers to settle. I make the assumption that

Jolo’s military strength is decreasing in distance from Jolo and that the further away

from Jolo an area was, the easier it was for the colonizers to settle in.

5 Identification and Estimation of H1

5.1 OLS for H1: Mission Exposure and Development

Hypothesis 1 posits that greater mission exposure leads to higher levels of current

economic development. I empirically test this claim by estimating the following OLS

regression:

luminosityi = α+ βMissionExposurei + γXi + εi

Where luminosity is my measure of night light luminosity, and the independent vari-

able of interest is MissionExposure, the number of years a municipality was exposed to

religious colonial institutions via mission settlement (as proxied by the year the first mis-

sion arrived). To address the endogeneity of mission settlement I include Xi, a vector of

geographic, climate, and location controls, in the regression. Finally, εi accounts for the

remaining unexplained variation. I cluster my standard errors at the municipality level,

the assumption being that the treatment was enacted at the level of the municipality.

27

Table 1 shows the results. Column (1) estimates a “naive” regression of luminosity on

missionary exposure. Columns (2) - (4) address the potential endogeneity of mission

settlement due to factors such as the propensity to settle near coastal areas, areas that

are more amenable to agricultural activity, and the distance of the mission to the mis-

sionaries’ initial port of entry. I therefore control for climate, locational, and geographic

factors, respectively.

Table 1: Missionary Exposure and Economic Development (H1)

Log Night Light Luminosity(1) (2) (3) (4)

mission exposure 0.00126∗∗∗ 0.000985∗∗∗ 0.000987∗∗∗ 0.000512∗∗∗

(0.000112) (0.000110) (0.000107) (0.000116)

Dep Var Mean 1.695 1.695 1.695 1.695Geographic Controls × × ×Climate Controls × ×Locational Controls ×N 1646 1646 1646 1646

Standard errors in parentheses∗ p < 0.10, ∗∗ p < 0.05, ∗∗∗ p < 0.01

The results are strongly suggestive of the positive relationship between mission exposure

and economic development. All estimates of the key coefficient β, are positive and highly

statistically significant. Moreover, the magnitudes of the coefficient imply a significant

effect of exposure to colonial institutions on development. Consider the coefficient in

column (4). This result implies that an added 100 years of colonial exposure, considerably

below the average years of exposure conditional on initial colonization, leads to a 5%

increase in night light luminosity.

5.2 Robustness Checks

While the previous results are strongly suggest the plausibility of H1, outstanding iden-

tification concerns remain. I address these concerns by subjecting equation (1) to a

variety of robustness tests.

28

One concern is that this result is being driven by outlying municipalities, such that a

few very luminous cities are driving the results in Table 1. To test whether outliers are

driving the result, I re-estimate equation (1) after removing the top and bottom 5% of

my sample. I provide the results in Column (1) of Table 2. The coefficient on missionary

exposure remains positive and highly significant.

Table 2: Missionary Exposure and Economic Development (H1) - Robustness



(0.0000729) (0.000160) (0.000112) (0.0000724)

Dep Var Mean 1.606 1.695 1.695 1.606Standard Controls × × × ×No Outliers × ×Province Clustering × ×Islam × ×N 1480 1646 1646 1480


Second, while I assumed that the treatment was applied at the municipality level, it

is possible that this treatment had effects outside of the municipal boundaries. For

example, areas outside of the municipality where the mission settled may not have for-

mally established a state, but potential migration in and out of the state may imply

that citizens in later missions already had some level of experience with state functions.

This would mean that clustering my standard errors at the municipality level would

lead to biased estimates of my confidence intervals. I therefore cluster at the province

level. Provinces are a more aggregated level of executive power, composed of cities and

municipalities. Note that clustering at a higher level of aggregation works against my

hypothesis, providing a more stringent test of statistical significance. The main result,

in Column (2), remains positive and highly significant.

Third, a potential factor affecting the endogeneity of mission settlement is the presence

of competing religions. In particular, the Islamic sultanate in Jolo in the south of the

29

Philippines presented a source of both theological and military conflict for the mission-

aries. The missions could not locate close to the sultanate because of raids that the

Muslims would commence once the missionaries got too close. Furthermore, the Jolo

sultanate could defend its territory. The first mission to Jolo was in 1896, more than 300

years after the Spaniards first settled in the country. Column (3) includes the distance

of the mission from Jolo to account for this endogeneity. The results remain the same.

Finally, I combine all the previous robustness tests into one regression. Column (4)

therefore includes all the standard controls of Table 1, while also controlling for distance

from Jolo, clustering at the province level, and removing outliers. This serves as a rigid

test of the causal relationship. The coefficient on missionary exposure is still positive

and statistically significant.

5.3 Instrumental Variables Estimation for H1

While the robustness tests of Table 2 lend further support to H1, it is still possible

that unobserved factors might have affected both mission exposure and current levels

of economic development. In order to address this potential endogeneity, I utilize an

instrumental variables approach that leverages the missionaries’ initial forays into an

unknown territory from the major missions in the country. The Philippines had four

major mission settlements—Manila, Cebu, Naga, and Vigan. Missionaries would fan

out from these core settlements and establish missions in the periphery of the country. I

instrument state missionary exposure on the subset of initial missions that the religious

orders undertook within a given radius from these major settlements. The very first

missions near these main settlements were therefore more likely to be settled in by

missionaries, but these early missions within the buffer zone were as-if random because

missionaries settled in the first places they could find that were habitable. They did not

yet possess information on the best places for settlement in the country.

I operationalize this instrument by drawing a circle with a 30-mile radius around each

30

of the four major settlement areas2, creating four distinct buffer zones. Next, I identify

missions that are both within the buffer zone and early (established in or before 1600).

My instrument is then a binary variable that equals 1 if a mission is both within the

buffer zone and was established before 1600. I call this variable the early exploration

instrument.

Figures 1 and 2 present a visual description of the buffer zone idea. Figure 2 presents

the geograhpic distribution of all missions during the era of Spanish colonization. The

green dots in Figure 3 represent all missions established within the 30-mile radius buffer

zone of the major settlements—Manila, Cebu, Vigan and Naga. The subset of missions

that were in the buffer zone and established before 1600 are the instrumented missions.

all.jpg

Figure 2: Panel A - AllMissions

30.jpg

Figure 3: Panel B -Buffer Zone Missions

The logic of this instrument is that missionary settlement was exogenous (as-if random)

within the buffer zone and during the first few decades of colonization, but endogenous

outside of the buffer and during later periods of colonization. Early missions within the

buffer zone were simply the first livable places the missionaries could find. They did not

conduct a comprehensive canvassing of the country before choosing the best places to

settle in. Unlike the early missions within the buffer zone, “late” (post-1600) missions

within the buffer zone, and all missions outside the buffer zone, were not settled in as-if

random. By the “late” period, missionaries already had sufficient information on the

colony, through explorations and engagement with knowledgeable natives, such that the

location of later mission settlements was planned out and selected based on the ability

of missionaries to build a stable, economically vibrant locality.

One subset of missions worth considering are early missions established outside the

2The use of 30 miles is justified later in the text. Furthermore, I test whether the results are robustto adjustments of this buffer zone.

31

buffer zone. Roughly 10% of all missions belong to this category. A potential argument

is that these missions were also as-if randomly settled in because they were occupied

during the first few decades of colonization, when missionaries had little information of

the colony. Hence the unknown territory logic still applies to this subset of missions.

I claim that this is not the case. Early missions outside of the buffer zone were only

established if missionaries had some information on the suitability of those areas. The

intuition is that these missions were established in the periphery, which was harder to

reach than areas near the religious centers. Missionaries would therefore only incur the

cost of traveling far away if they had information that this area granted them favorable

conditions, therefore implying endogenous selection.

Historical evidence supports the parameters I use in the construction of the early explo-

ration instrument and the as-if random assumption for these early missions within the

buffer zone. Two arguments need to be justified: (i) the use of 1600 as the cutoff year,

and (ii) the use of 30 miles as the radius of the buffer zone. In other words, missions

established within these parameters must be as-if randomly settled in. Phelan (1959)

noted that the first few decades were “preparatory and exploratory” with “a scarcity of

missionary personnel, and those available were without linguistic training”. He further

notes that “it took some fifty years of intensive missionary activity to lay the foundation

of Philippine Christianity”. Schumacher (1987) corroborates these findings, also noting

that the first few years of colonization and missionary expansion, noting that “by 1595

the process of Christianization had advanced so far that a more extensive organization

of the Church seemed necessary”. There is some arbitrariness in the choice of year, but

the year 1600 seems to be a reasonable choice based on the historical record.

The use of 30 miles corresponds to the area of initial conquest and the major settlements

during this early period of Spanish colonization. The argument here is that during the

period of exploration the Spaniards, for the most part, stayed in these major settle-

ments (Schumacher 1987). The period of expansion coincided with the strengthening of

32

the missionary apparatus. Phelan (1959) notes that once the missionaries entered the

“golden age of the missionary enterprise” they left the main settlements and engaged in

a serious expansionary project of evangelization. The choice of 30 miles as the radius is

also somewhat arbitrary, so the empirics test the robustness of the results to alternative

radius lengths.

The viability of this instrument rests on two assumptions: that (i) the instrument, i.e.

early exploration missions, are correlated with missionary exposure, and that (ii) the

instrument, conditional on controls, is uncorrelated with any unobserved covariates. It

seems intuitive that my instrument satisfies the first condition. Missionaries are more

likely to establish missions in places closer to where they first started, simply because

settling in places closer to the major capitals is less costly than going further away.

Furthermore, areas near the major capital (and hence near large populations) were more

habitable, making it easier for missionaries to settle there.

This intuition can be backed up by formal statistical tests. Table 3 examines the first

(instrument relevance) assumption by presenting the results of the first stage relation-

ship of early exploration missions on missionary exposure. Column (1) includes all the

geographic, climate and location controls from Table 1. Column (2) further includes

the Islamic control and clusters at the region level. To address advantageous selection

of the 30-mile radius, Columns (3) and (4) are similar to Column (2), except that the

instrument considers missions within a 25 and 35 mile radius of the main settlements,

respectively.

The results strongly suggest that the first condition is met. Early exploration missions

are positive and highly statistically correlated with missionary exposure. Furthermore,

the Kleibergen-Paap-Wald F-statistic is always greater than 100, substantially larger

than the commonly used rule-of-thumb cutoff for weak instruments (about 10).

The exogeneity of the instrument hinges on the (second) assumption that missionaries

did not systematically select areas within the buffer zone to settle in during the early

33

Table 3: First Stage IV Estimation (H1)

Missionary Exposure(1) (2) (3) (4)

EarlyExpMission 30 320.5∗∗∗ 240.5∗∗∗

(3.882) (9.085)

EarlyExpMission 25 241.7∗∗∗

(8.694)


(7.181)

Dep Var Mean 113.6 113.6 113.6 113.6Geographic Controls × × ×Climate Controls × × ×Locational Controls × × ×N 1646 1646 1646 1646


period of colonization. While this assumption is ultimately untestable, I propose the

following empirical test of the implications of the core logic of my instrument: exoge-

nous mission selection within the buffer area and during the first period of colonization

and endogenous selection otherwise. Note that even within the specified 30-mile ra-

dius there was considerable variation in the timing of mission settlement. For example,

some missions within the 30-mile radius of the major settlements were established in

the 1800s, over 250 years after the Spanish first settled in the colony. If selection on

mission settlement indeed took place among the early missions within the buffer zone,

we should expect that the early missions within a given radius are different along ob-

servable dimensions than the later missions within the buffer zone. In other words, the

missionaries chose the best places to settle in first, and only over time did they settle in

marginally less favorable areas.

A result consistent with my hypothesis that initial settlement was exogenous would

be no significant difference along observables for early settlement and late settlement

missions.Panel A of Table 4 shows the results of a difference in means test. I use as

34

observable variables the measures of soil quality (SQ1 - SQ7), ruggedness, distance

from the coast, temperature and precipitation. Consistent with the claim above, the

difference along observables between early and late settlement areas within the buffer

zone are not statistically different. This result is consistent with my argument that

early missions within the buffer zone were not systematically selected into based on

favorable qualities—if so missionaries would have settled into the more favorable places

first, less favorable places later.

35

Table 4: Balance Test for Instrument Exogeneity

I also claim that once the missions moved outside of the buffer region mission settlement

now becomes endogenous. missionaries only travel far from the main settlement area if

they know where they want to go. I test this similarly by running a difference in means

test along observable dimensions for variables that could plausibly affect settlement. En-

dogenous mission settlement implies that missions in areas that were settled in earlier

would be statistically different from missions that were settled in later. Panel B of Table

X displays the results. Consistent with the claim that outside of the buffer zone selec-

tion of mission settlement is endogenous, the difference in means results show multiple

significant differences between early and late missions along observables outside of the

buffer zone. In other words, early missions outside of the buffer zone were systematically

selected, and once the most favorable areas established missions, later missions outside

the buffer zone that were less favorable were settled in.

36

The discussion and evidence above presume a plausibly valid instrument. I therefore

move to estimation of the causal effect.

Formally, the instrumental variables equations are:

MissionExposurei = αi + θearlyexplorationmission+ γXi + ρi

luminosityi = α+ β MissionExposurei + γXi + εi

Where MissionExposurei, αi, luminosityi and γXi are as in equation (1),

earlyexplorationmission is the instrument, and MissionExposurei is the predicted

value of population from the first stage equation. I estimate this system of equations

using two stage least squares.

Table 5: Reduced Form Results (H1)


EarlyExpMission 30 1.019∗∗∗ 0.720∗∗∗

(0.162) (0.150)


(0.160)


(0.110)



The results for the reduced form and IV estimation results are presented in Tables 5

and 6. Columns (1) to (4) mirror the columns of Table 3. A result consistent with

37

Table 6: Missionary Exposure and Economic Development (H1)—IV Estimation



(0.000503) (0.000600) (0.000668) (0.000438)



the theory would be a positive and significant β coefficient. This is what we see. The

coefficient of interest is positive and statistically significant across most specifications,

and is therefore suggestive of a positive and significant relationship between exposure to

colonial religious (missionary) institutions and economic development.

6 Identification and Estimation of H2

6.1 OLS for H2: Mission Exposure and State Capacity

Thus far, we have established that greater exposure to religious colonial institutions leads

to greater current economic development (H1). H2 argues that state capacity is a relevant

(but not exclusive) mechanism that mediates this result. In particular, it argues that

increased capacity was brought about by the imposition of colonial religious institutions,

therefore capacity should be higher along the specific aspects of state capacity that

were built up by the missionary state—greater legibility, increased capacity for revenue

extraction, and more provision of public goods. The analysis for H2 follows that of H1,

but for brevity, I present only the main OLS and IV results here, with the remaining

tables in the Appendix (NOT YET DONE).

I empirically test H2 by estimating the following regression:

38

statecapacityi = α+ φMissionExposurei + γXi + εi

Table 5 presents the results. For each variable, the first column includes all standard

controls while the second column includes the Islam control and winsorizes the outlying

dependent variable observations. Columns (1) and (2) use tax revenues per luminosity

unit as a measure of revenue generation, while Columns (3) and (4) use road density as

a measure of public goods provision.

Table 7: Missionary Exposure and State Capacity (H2)

Tax Revenues per NL Road Density(1) (2) (3) (4)

mission exposure 0.00145∗∗∗ 0.00100∗∗∗ 0.00227∗∗∗ 0.000984∗∗

(0.000207) (0.000254) (0.000477) (0.000489)

Dep Var Mean 4.209 4.209 0.879 0.879Geographic Controls × × × ×Climate Controls × × × ×Locational Controls × ×N 1174 1174 1646 1646


This specification is similar to equation (1), except that the dependent variable is some

measure of state capacity. The key parameter of interest here is φ, and evidence in

support of the state capacity mechanism would be that φ is positive and significant

for all columns. While the causal mediation effect is extremely difficult to identify

(Imai et al), the results provide strong suggestive results consistent with the predictions

of my theory. Exposure to religious colonial institutions is positively and significantly

correlated with tax revenues per luminosity unit and road density. The results are robust

across specifications.

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6.2 Instrumental Variables Estimation for H2

As with H1, it is still possible that unobserved factors might have affected both mission

exposure and current levels of state capacity. I therefore reuse the Early Exploration

Missions variable as an instrument for religious colonial exposure. Since the validity of

the instrument has already been argued for, and the first-stage results were presented

above, I move directly to the results.



EarlyExpMission 30 1.016∗∗∗ 0.798∗∗ 3.010∗∗∗ 2.457∗

(0.250) (0.336) (0.983) (1.372)





mission exposure 0.00372∗∗∗ 0.00347∗∗ 0.0104∗∗∗ 0.0101∗

(0.000882) (0.00141) (0.00337) (0.00549)



Table 8 and 9 present the reduced form and IV estimates for the relationship between

colonial exposure and state capacity. As with Table 7, for each variable the first column

includes all standard controls while the second includes the Islam control and winsorizes

40

the outlying dependent variable observations. Columns (1) and (2) use tax revenues per

luminosity unit as a measure of revenue generation, while Columns (3) and (4) use road

density and public schools per capita as a measure of public goods provision. The right

hand side of the last four columns is similar in specification to that of the first two.

This specification is similar to equation (2). The key parameter of interest here is φ,

and evidence in support of the state capacity mechanism would be that φ is positive and

significant for all columns.

The results of the reduced-form and IV estimates further corroborate my theory. Colonial

exposure is positively related to my measures of state legibility, revenue generation, and

public goods provision.

Taken together, these results support the claim that colonial exposure affects economic

development through increased state capacity. In particular, it is the elements of state

capacity that accrue towards the colonial state—legibility, extraction, and provision—

that explain modern economic development. The bundle of institutions that make up the

missionary-built state and their persistent effect across time helps explain the colonial

origins of economic development.

6.3 Alternative Mechanisms and Robustness

Thus far, I have provided evidence that exposure to religious colonial institutions causes

local economic development (H1), and that state capacity mediates this effect (H2).

Mechanisms are not exclusive, and it is possible that plausible alternative mechanisms

that have been proposed and teased out with respect to missionary activity and colonial-

ism are driving these results. This section tests whether these alternative mechanisms

mediate my results.

41

6.4 The Culture Hypothesis

There is a growing literature on the role that culture plays in economic development

(Tabellini 2010, Nunn 2012). In particular, papers such as Waldinger (2018) and Va-

lencia (2018) have argued that the Catholic missions had distinct cultural and organi-

zational characteristics that led directly to differential economic outcomes. Both argue

that differences among religious orders, in particular the differential effect of the Jesuit

missions, led to varying levels of public goods provision vis-a-vis other religious orders.

They both take this as evidence for the effect of culture on economic outcomes.

If culture is in fact a relevant mechanism in my story, then the results from these papers

serve as a valid test. My results may be driven not by missionary exposure, but by

spatial variation in where the various religious orders established their missions. I test

the culture hypothesis formally through the following regression:

luminosityi = α+ ρJesuiti + βMissionExposure+ γXi + εi

Where Jesuit is a dummy variables for whether a given mission was a Jesuit mission

or not. I single out Jesuits as the relevant order because there is empirical support for

the differential effect of Jesuit missions on economic development. As mentioned above,

Waldinger (2018) and Valencia (2018) have both shown that Jesuit missions in Mexico

during the period of Spanish had a differential versus other political orders on current

levels of public goods provision. A result consistent with the culture hypothesis would

be a positive and significant ρ, implying that culture, as opposed to st is at least partly

driving the results.

We do not, however, see this in the data. Table 9 presents the results. Columns (1) to (4)

follow the standard specifications. The estimated coefficient of ρ is far from statistical

significance in most specifications. This result does not imply that culture, broadly

conceived, is not a relevant mechanism. This result does , however, lend support to the

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Table 10: the Culture Hypothesis (Variation by Jesuit Order)


Jesuit Mission -0.0470 0.0498 -0.116∗∗ 0.0813(0.0527) (0.0530) (0.0510) (0.0551)


(0.000229) (0.000214) (0.000207) (0.000194)

Dep Var Mean 1.870 1.870 1.870 1.870Geographic Controls × × ×Climate Controls × ×Locational Controls ×N 737 737 737 737


theory that it was the missions’ functions as de-facto states, rather than the direct effect

of the beliefs and cultures that they propagated, that led to their longevity affecting

economic development.

6.5 The Colonizer Identity Hypothesis

The results thus far seem at odds with an influential literature that posits that the rela-

tionship between colonial exposure and economic development can be explained by the

colonizing strategies of different colonizers. Lange et al (2006) and Mahoney (2010), in

particular, posit that there was an inverse relationship between the extent of Spanish

colonialism and economic development. In other words, areas with greater longevity of

Spanish rule should be poorer than areas with less longevity. They proposed institu-

tional quality as the underlying mechanism. The early period of created mercantilist

institutions that concentrated power in the hands of a few elites. The Bourbon reforms

of the 18th century led to more open trade in the Spanish colonies, and the areas in the

periphery that experienced lower levels of colonization would develop more open markets

and less economic concentration, hence greater development.

43

This is obviously at odds with the evidence presented above. Places with higher levels of

colonialism, and hence greater missionary exposure, are richer today. What explains the

divergence of their results with mine? While speculative, this could be for two different

reasons. First, Lange et al (2006) and Mahoney (2010) assume that the Spanish model

was resource extraction, with a shift to trade and open markets only after the Bourbon

reforms. This presumes that there were resources to extract. The Philippines did not

have sufficient resources to extract in the first place, so the most profitable economic

model was trade from the very beginning.

7 Conclusion

This paper proposes a theory of religious colonization, conceptualizing religious coloniz-

ers, in practice missionaries from various religious orders, as distinct from their materi-

alistic, profit-seeking counterparts in their motivations, actions, and long-term impacts.

Religious colonizers are motivated by their desire for conversion. They derive intrinsic

(spiritual) utility from converting non-believers to the faith as well material (worldly)

utility form the economic and social advancements that come with conversion. Conver-

sion and its concomitant benefits imply long-term settlement, which in turn led to the

building up of a de facto state that improved local legibility, revenue generation, and

public goods provision. Improved state capacity served as the primary mechanism by

which exposure to religious colonial institutions is correlated with economic development.

If one believes the arguments in this paper and the validity of conceptualizing religious

colonization as a distinct mode of colonial expansion, then this paper opens up a Pan-

dora’s box of follow-up questions. First, how do secular and religious colonizers differ

along the extensive margin of colonial expansion? In other words, do religious colonizers

settle in areas more geographically or locationally distinct from secular colonizers? If

these differences are in fact present, what determines the settlement decision?

44

Another question can examine the effect of religious colonization on local politics. Var-

ious questions include: are religious teachings and religious culture transmitted across

generations to affect the behavior of both local elites and voters? Does exposure to the

state make voters more receptive to outsiders and non-traditional political candidates?

Has the missionary state crowded out the nation-state, such that central transfers and

centralization has been hindered?

Finally, cross-country work can verify empirically how externally valid the model of

religious colonization actually is, in contexts such as Latin America and Africa, or to

various religious denominations, such as Protestant missionaries.

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