6 - Geography, Institutions, Clime, Genetics & Development Flashcards
3 Traditional versions of geography
1) Determines work effort/incentives/productivity
2) Determines available technology, e.g in agriculture
- soil, vegetation, animals, physical assets
3) Disease burden
Role of geography:
- Nearly all countries in the tropics are poor
- Coastal economies generally higher income than landlocked countries
GDP per capita * population density = GDP density
US/ Western Europe/ East Asia: globally 3% of land, 13% of pop., 32% of world GDP
Geography mechanisms
Population densities arise where agriculture possible
Basic idea - climate affects economic performance
- effects of temperature, precipitation, and natural disaster
Nordhaus (2006) :
20% of income difference between Africa and rich countries explained by geography
Dell et al (2009)
2000, countries on avg. 8.5% poorer per cap. per 1* warmer
Easterly and Levine 1997
Per capita GDP growth inversely related to ethnolinguistic fractionalization
The Serial Founder Effect:
- lower genetic diversity among indigenous populations at greater migratory distances from East Africa
Role of Genetics
Original population - 3 alleles
Founder population - 2 alleles
Sub-founder population - 1 allele each
Expected Heterozygosity Index of Genetic Diversity
The probability that two individuals, selected at random from a given population, are genetically different from one another (in a certain spectrum of genes)
Human Genome Diversity Project (HGDP)
Designed to study GD in isolated populations in order to shed light on:
- the scope of human diversity
- the journey of humankind from Africa
Genetic diversity increases the incidence of:
- mistrust
- civil conflicts
North and Thomas 1973
fundamental explanation of comparative growth = institutions
Economic institutions matter for growth since they shape the incentives of key comic actors
- investments, human capital, tech
- geography/ culture
- institutions major source of cross-country growth and prosperity
Economic institutions are endogenous
Since determined by choices of society, which in part arise as economic consequences of institutions
Distribution of political power in society also endogenous:
De jure (institutional) power - originating from political institutions
De factor political power
Political institutions (though slow changing) are also endogenous
Leads to persistence
Two sources of persistence
1) Political institutions are durable
2) group much richer
Technological and environmental shocks can upset:
balance of de facto political power –> political institutions –> economic institutions
Historical example of changes in land market and atlantic trade during 16th and 17th centuries
- Increased econ fortunes of landowners and traders
- Gentry and merchants desired to change property rights
- Raised large army, overthrew stuart monarchy
- Resulted in change to political institutions
Good economic institutions
those that provide security of property rights and relatively equal access to economic resources to a broad cross-section of society
Implications of good economic institutions
1) more likely to arise when political power in hands of relatively broad group with significant investment opportunities
2) institutions more likely to arise and persist when only limited rents that power holders can extract from rest of society
Better econ. institutions –>
higher average incomes
Korea split 1948, North korea:
society socialism, economy directed by govt. as opposed to markets
south korea:
maintained system of private property, attempted to use markets and private incentives to develop economy
Institutional reversal + institutional hypothesis
Predicts reversal of fortune
Relatively rich places received poor institutions and thus poor economic outcomes
Europeans likely to create self-serving institutions
- extractive institutions: where resources available, typically small group europeans + large indigenous pop.
- property rights institutions: few resources and few people, more heavily settled by europeans
Whether europeans could settle or not determined by
- disease environment
- historical disease environment is exogenous source of variation for institutions today
Acemoglu et al 2001 argues that:
once control for institutions, geography and culture have no effect on growth
explains why strong correlations between geographic variables and income per capita
