geography and climate Flashcards
. , We will restrict our analysis to two aspects of geography
Physical geography
Climate
How Might Geography Affect Development?
o Physical features influence economic activity primarily - effects on transaction and transportation costs
o Physical barriers impede the exchange of goods, services, ideas, etc.. this hinders economic development
Average distance of a country from the sea and GDP per capita
o There is a negative correlation between the average distance of a country from the sea and GDP per capita
o In today’s globalised economy access to sea is very important
o More than 80% of traded goods are transported by sea
The negative effect of distance to the coast on GDP per capita suggests that….
o transport costs and access to international markets may be important
o The farther from the sea = higher your transport costs will be
▪ don’t know if transport costs directly or indirectly influence economic growth
o economists have exploited the fact that proximity to the sea is only important if you actually trade with others
Two examples of time periods where the relative value of being close to the sea changed dramatically
▪ Marker orientated policy reform in China from 1978
▪ Improvements in sea fearing technology and the discovery of the New World around 1500
Atlantic Trade to the New World (Post-1500)
o The rapid expansion of Atlantic trade post-1500 soon overtook trade in theMediterranean
o Those countries in Western Europe that participated in Atlantic trade urbanized more quickly that…
▪ Non-Atlantic traders in Western Europe
▪ Eastern European countries (trading in the Mediterranean)
Ruggedness and and GDP per capita
o Typically, ruggedness of terrain is thought to deter economic growth:
▪ Ruggedness is inhospitable
▪ It hinders trade (costly to traverse)
▪ It’s hard to farm
o Broadly – the data seems to support a negative correlation
o However… there exists an Africa-specific, positive effect
▪ According to Nunn and Puga (2012) this effect originates from the slave trade
▪ More rugged areas were less easily accessible to slave traders
▪ The negative effects of the slave trade persist until today and are reflected in lower GDP levels
o Depending on a region’s history, identical geographical features can have very different effects on economic development
How Might Climate Affect Development? - Temperature
o On average, hotter countries are much poorer than countries located in temperate regions
o On average, national income is reduced by 8.5% when average temperature increases by 1 degree Celsius
o In fact, based on calculations by Dell,Jones, and Olken (2009), temperature alone can explain 23% of the variation in cross-country income today
o Changes in temperature immediately affect productivity and income per capita directly
o Temperature is also correlated with a number of other important outcomes related to development - Mortality, Civil conflict risk
How Might Climate Affect Development? - Disease environment
o Disease Environment: climatic potential for disease transmission
o The local climate also determines which diseases have the greatest potential to survive
o Many diseases that are extremely harmful to humans thrive in warm climates
▪ Dengue fever
▪ Typhoid
▪ Yellow fever
▪ Schistosomiasis
How Might Climate Affect Development? - Malaria Risk
Studies into the effect of malaria on development don’t use measures of malaria prevalence (cases)
▪ Prevalence suffers from a reverse causality problem:
▪ Richer countries can combat malaria more effectively
Instead – Studies commonly use a malaria ecology measure:
▪ The higher the measure, the higher the local suitability for parasite and mosquito development
o Malaria ecology is related to economic development
o There is a strong negative relationship between the malaria environment and GDP per capita
Malaria – Direct, Contemporaneous Effects
Productivity
o Malaria directly reduces productivity - if someone is sick, they are not able to work (at least not at their fullest capacity)
o However: malaria primarily affects infants and children - a mostly non-productive group?
o Importantly though: malaria can also influence cognitive abilities and school attainment during childhood - human capital
▪ This does influence labour market outcomes and productivity later on
Fertility
o One important feature of the transition from a ‘Malthusian World’ to a world of sustained economic growth is fertility transition
o Fertility transition: Parents favour ‘quality’ over quantity of children
▪ Malaria influences this decision and therefore influences economic growth
Malaria – Indirect Effects
Historical Effects
o Institutions (again)
o From the past lectures/seminar: The theory that settler mortality influences the type of institutions today
▪ The disease environment influenced settler mortality – therefore it is likely to have an effect on institutional quality today
Which channel is more important? - Malaria
o Direct malaria-related health effects
o Indirect malaria-induced differences in the quality of institutions
▪ Sometimes called the ‘Sachs versus Acemoglu et al.’ debate
Malaria – Sachs Versus Acemoglu et al.
o “Tropical diseases obviously cause much suffering and high rates of infant mortality inAfrica, but they are not the reason that Africa is poor. Disease is largely a consequence of poverty and of governments being unable or unwilling to undertake the public health measures necessary to eradicate them”- Acemoglu and Robinson (2012)
o “Acemoglu and Robinson are wrong: malaria in Africa is not just a consequence of poverty but also a cause of poverty”- Sachs (2012)
Why does it matter whether malaria (or any tropical disease) influences growth through direct effects of historical institutions?
The short answer….policy implications
o Depending on which effect dominates, eradication of malaria will lead to different outcomes:
▪ Sachs: Catch up of regions with high malaria suitability is very likely
▪ Acemoglu et al.: No (or minimal) effect of eradication on economic development
o It important to remember however…
▪ In both cases – malaria eradication will be extremely beneficial for individual health!
