Problem Set 4

Question 1

How does reversal of fortunes argue against simple geography hypothesis?

Answer 1

• on the basis of centuries of long patterns of economic development
• geography is time invariant dependant and therefore distribution of wealth should be unaltered but have seen a reversal
• show significant divergence which shows that geography cannot be the central determinant of economic growth
• discredits the temperate drift hypothesis (climate has changing effects on economic prosperity over time)
• shows the findings in reversal of fortunes are robust against a number of geographical characteristics eg. distance to sea and also for spread of technology

Question 2

What are criticisms of Sachs geography hypothesis?

Answer 2

• only simple correlations, does little to establish causality or prove there is no case for omitted variable bias
• sachs argues tropical regions worsened health which affected GDP but Acemoglu et al disease and development shows improvement to health has little impact on GDP

Question 3

What is Acemoglu (2001) (Settler IV) robust to?

Answer 3

The estimation is robust to the inclusion of controls related to the colonizer, climate, religion, geography, soil quality, resources, and ethnolinguistic diversity; as well as
to the inclusion of controls related to the disease environment