Impact of Colonial Institutions on Economic Development

European colonial rulers established different political and economic systems in the regions they controlled, significantly impacting their long-term prosperity. In areas like India, Brazil, and parts of Africa, the colonizers created extractive systems that prioritized resource exploitation over the welfare of local populations, resulting in sustained poverty post-independence. Conversely, in regions such as the United States and Australia, where colonizers faced labor shortages, inclusive systems were developed, benefiting both the settlers and the indigenous peoples. This historical disparity in governance structures has contributed to the stark wealth gap observed today, with some countries thriving while others struggle to recover from their colonial past.