We propose a unified theory to explain the diverse paths of economic and institutional development of colonized and colonizers following the great discoveries at the end of the XV century. In our theory, the institutional and economic divergence between Spain and England observed during the age of colonization obeys to the same forces put forward by Engerman and Sokoloff (1997) to explain the divergence between Latin America and North America: factor endowments at the moment of the conquest.
