Recent research shows that colonialism reversed levels of development in much of the non-European world. To explain this reversal, analysts focus on conditions within the colonized areas. By contrast, drawing on evidence from Spanish and British colonialism, the authors show that the economic models of the colonizing nations also affected the reversals of fortune. Mercantilist Spain tended to colonize most extensively precolonial regions that were populous and highly developed; in turn, extensive Spanish colonization had negative consequences for postcolonial development. In comparison, liberal Britain tended to colonize most extensively precolonial regions that were sparsely populated and underdeveloped; in turn, extensive British colonialism had comparatively positive effects. Thus, both Spain and Britain reversed the fortunes of precolonial regions, but in largely opposite ways.Recent research argues that European colonialism caused a great reversal in levels of development throughout much of the non-European world

States are central to development and human well-being. 1 In Afghanistan, Haiti, and the Democratic Republic of Congo, which for many contemporary commentators epitomize weak or fragile states, the inability to provide security and establish a presence throughout their territory has left local communities vulnerable to warlords and militias and undermined the prospect of economic growth and basic social provision. Other states, for instance Nicaragua, Nigeria, and Peru, have been better able to bring an end to enduring cycles of civil violence and warfare. Yet the provision of basic security and public goods remains fragmented and confined to certain territorial areas, leaving out substantial parts of the population. 2 Unlike these countries, a wide range of others, including Costa Rica and the Indian state of Kerala, while by no means endowed with a strong state by any conventional means, St Comp Int Dev (2008) 43:219-230

This article revisits and seeks to challenge one of the most powerful hypotheses in the political economy scholarship: the supposedly negative relationship between ethnic diversity and public goods provision. We suggest that the relative lack of attention to politics and history makes much of this literature vulnerable to endogeneity problems. In response, we develop a state-centered approach that brings time and temporality to the analytical foreground. This approach addresses issues of reverse causality and spuriousness by examining how different historical trajectories of nation-state formation, and the state strategies and capabilities to provide public goods associated with each, might have shaped both contemporary diversity and public goods provision. Bringing in politics and history and putting the analytical focus on the state also allows the article to open up the debate around how distinct manifestations of politicized ethnicity might influence state provision of public goods.

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