For more than a century, the countries of Spanish America have maintained their level of development relative to one another. This article argues that this enduring regional hierarchy is a path‐dependent legacy of Spanish colonialism. Those territories that constituted the centers of the Spanish colonial empire tended to become the region’s least developed countries; by contrast, those territories that were peripheral to the Spanish empire tended to become the most developed countries. Using methods for assessing both correlational causation and necessary/sufficient causation, the article explores competing hypotheses to explain this inverse relationship. It finds that the density of the indigenous population and the strength of liberal elites during the period from 1700 to 1850 were critical factors linking colonial and postcolonial development.
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