Blood, education and economic Development: How the 19th century wars in Latin America Foiled its economic development

• The prolonged war in the 19 th century LA led to underinvestment in human capital and delayed economic development. • Regressions reveal that the high military budget share crowded out public spending on education and R&D. • Underinvestment in human capital has been a significant contributor to poor performance up to the present day. In this paper, we hypothesize that the prolonged wars in Latin America during most of the 19th century hindered human capital development and delayed economic progress well into the 20th century. Collecting novel data for the seven largest Latin American economies over the period 1820–2016, we show that the extraordinarily large share of military expenditure in total spending crowded out investment in education and R&D, which in turn had persistent effects on economic development.