The correlation between AJR’s proposed instruments and their preferred measures of
institutions is very high indeed. For example, the logarithm of settler mortality is correlated at -.54
with average executive constraints, and -.51 with average expropriation risk, while the logarithm of
population density in 1500s is correlated at -.35 and -.40 with the same measures of institutions. 22
But are AJR’s proposed instruments valid? We have several concerns, some already
discussed in the literature, but some new and perhaps more important. First, settler mortality is
basically uncorrelated with the constitutional measures of checks and balances we discussed in
Section II, and the logarithm of 1500 population density is only very weakly correlated with
plurality and proportional representation. If the Europeans really brought their institutions
constraining government, one might expect this influence to be reflected in “rules and procedures,”
yet this does not appear to be the case in the data. This is also surprising in light of all the
available evidence that colonial transplantation of legal traditions – the ultimate rules and
compliance procedures -- has been central in shaping the legal and regulatory systems of the
receiving countries. Why would colonial influence on rules and procedures be so strong in one
case, but not in the other?