University of Maryland
Center for Global Development
All developed countries were once developing, and they did not simply develop workable institutions by happenstance or luck. At this CGD brownbag seminar, John Wallis, an economic historian interested in how politics and economics interact in the development process, will talk about how American state governments came to solve the problem of financing infrastructure projects using debt finance in the 1830s and 1840s. Like contemporary episodes (including Europe), the experience was more disaster than success, with eight states and the territory of Florida finding themselves in default. But unlike the contemporary world (again, including Europe), American states figured out ways to change their political institutions to mitigate the political and economic problems of financing the large infrastructure projects necessary to promote economic growth, as evident by changes in state constitutions beginning in 1842. Wallis will illustrate how these institutional changes enabled American governments to credibly borrow to invest in infrastructure.