Private Colonization and State Capacity: Evidence from the Brazilian Donatary Captaincies

Abstract

This paper analyzes the impact of private colonization on government size and public goods provision in the medium and long run. We focus on the Donatary Captaincy system in Brazil, which split the Portuguese colony into strips of land and granted private citizens jurisdiction, rights, and ownership of the territory. Our findings suggest that longer exposure to private colonization led to smaller governments, measured by the number of public employees and public expenditures, and lower provision of public education and health in 1920, approximately 180 years after the end of the system. While some convergence was observed in 2010, negative effects on health outcomes persist over time.