A post triggered by reading two others in quick succession. First, Mark Kleiman speculates what might have happened if Columbus had sailed to America for England instead of for Spain - would Central and South America now be democratic and prosperous? Second, AdamSmithee notes that regions where Western colonizers couldn't settle (e.g., tropical Africa with its endemic malaria) developed highly unequal institutions because of the colonial legacy of a tiny elite ruling over a large mass of poor people, which led to post-colonial kleptocracies, whereas regions were Western colonizers could settle comfortably developed more egalitarian institutions because they wiped out the native population (e.g., USA, Australia).
The contrast between the English and Spanish colonies in America is stark, and to some extent reminiscent of the contrast that AdamSmithee draws between Australia and tropical Africa. The English formed a homogenous/egalitarian but exclusivist colonial society: everyone was English because the colonists killed all the Native Americans, stole/bought their land, pushed them westward, and (inadvertantly in most cases) wiped them out with smallpox. In contrast, the Spanish formed a mixed/inclusivist but hierarchical society: they incorporated Native Americans into the colonial society, but only as slaves, subjugated laborers on encomiendas, etc. Was this contrast determined by the circumstances the colonizers found in America, or by the colonizers' cultural prejudices?
To a certain extent, cultural prejudices played a role. The Spanish, having just wrapped up the reconquista at home, saw colonization as conquest, a natural extension of conquest at home. Spain was full of soldiers and missionaries; once the Moors were defeated, the Indians were the natural next target. In contrast, the English perceived their colonization as one of settlement and plantations, of duplicating the English village from back home. (It didn't hurt that the Pilgrims were Separatists breaking away from the Anglican Church - they wanted to establish a new pure utopia, not convert the heathens.) This difference extended even to the rituals that made colonization "legitimate" in the eyes of the colonizers. As Patricia Seed has noted, the Spanish legitimated their conquest by reading out a proclamation that the land now belonged to the King of Spain, whereas the English legitimated their conquest by building fences around their land.
But cultural preferences are constrained by the possible. English colonists found a land already nearly emptied by Old World diseases (the Pilgrims found empty village upon empty village when they arrived in 1620). In Central and South America, on the other hand, populations were much higher to start with and the societies were better able to cope with the epidemics - so death rates were "only" 50%, rather than 90%. It's much easier to kill and marginalize a sparse population of semi-sedentary horticulturalists than to do the same to a dense population of sedentary agriculturalists who live in a large, bureaucratic empire (Aztec and Inca). Likewise, it's much easier to enslave and conquer a pre-existing political unit inhabited by people with useful skills like gold mining and agriculture, than to do the same to people without centralized political systems who don't farm and have no gold.
So, it seems to me that the English project of settlement wouldn't have succeeded in the face of the Aztec and Inca empires. Even in the Caribbean, the climate was more suitable for plantation agriculture rather than settler agriculture. So, insofar as US/Canadian egalitarian institutions (and hence successful economic development) were due to the duplication of English society and exclusion/genocide of Native Americans, it seems that English colonists wouldn't have created a society in Central and South America conducive to prosperity and democracy.
And to AdamSmithee, I would suggest that diseases matter not just in making Europeans not want to settle in malarial regions, but also in making it (much, much) easier for them to settle in certain regions where Old World diseases kill 90% of the native population.