30 November 2015
Mass deportations and killings of Ottoman Armenians during WWI and the Greek-Turkish population exchange after the Greco-Turkish War of 1919-1922 were the two major events of the early 20th century that permanently changed the ethno-religious landscape of Anatolia. These events marked the end of centuries-long coexistence of the Muslim populations with the two biggest Christian communities of the region. These communities played a dominant role in craftsmanship, manufacturing, commerce and trade in the Empire. In this paper, we empirically investigate the long-run contribution of the Armenian and Greek communities in the Ottoman period on regional development in modern Turkey. We show that districts with greater presence of Greek and Armenian minorities at the end of the 19th century are systematically more densely populated, more urbanized and exhibit greater economic activity today. These results are qualitatively robust to accounting for an extensive set of geographical and historical factors that might have influenced long-run development on the one hand and minority settlement patterns on the other. We explore two potential channels of persistence. First, we provide evidence that Greeks and Armenians might have contributed to long-run economic development through their legacy on human capital accumulation at the local level. This ending possibly reflects the role of inter-group spillovers of cultural values, technology and know-how as well as the self-selection of skilled labor into modern economic sectors established by Armenian and Greek entrepreneurs. Second, we show some evidence supporting the hypothesis that minority assets were also instrumental in the development of a modern national economy in Turkey.