Monarchy, Monopoly and Mercantilism: Brazil Versus the United States in the 1800s

GDP was $738 per capita in Brazil and $807 in the United States in 1800, but was $4,854 in the latter in 1900 and actually fell from $738 inBrazil by 1913. Relative factor endowments and institutions, broadlyconsidered, are twin traditional explanations for the extremely diversegrowth rates. In this paper we offer a complementary analysis of specificpolitical and economic structures to help explain the success andpersistence of monopoly restrictions in Brazil and the failure of internalmercantilism in the U.S. We conclude that Brazilian institutions provideda ripe and efficient environment for rent seeking. Such conditions did notexist in the U.S., a fact that helped produce the vast difference ingrowth in the 1800s.