Lecture 10: Can geography explain
“The Rise of the West”?
ECON 451
Fall 2012
Professor David Jacks
1
Another obvious candidate as “Rise of the West”
is inherently a geographic descriptor.
Prime determinant of factors such as:
1.) agricultural productivity
2.) health
3.) natural disasters
4.) trade costs
5.) natural resources
…
Introduction
2
Global Wheat Production:
Black = 6 to 110 million tons; Dark grey = 4 to 6 million tons;
Medium grey = 3 to 4 million tons; light grey = 1 to 3 million tons
Agricultural productivity
3
Prevalence of malaria:
Black = areas where transmission occurs;
Dark grey = areas with limited risk
Human health
4
Vulnerability to major natural hazards (World Bank):
Black = high
Dark grey = medium
Natural disasters
5
Trade costs
6
Trade costs
7
Global Energy Production (thousand tons of oil equivalent):
Black = 500,000 to 1,700,000; Dark grey = 100,000 to 500,000;
Medium grey = 20,000 to 100,000; light grey = 0 to 20,000
Natural resources
8
But how far does these factors—even in
combination—get us in explaining the GD?
Again, geography is—for all intents and
purposes—fixed.
So, geography likely to have a level rather than
slope effect.
Geography
9
Furthermore, many of the previous geographical
differences are likely endogenous to GDP.
E.g., GDP & malaria transmission.
Rampant problem…even the severity of natural
Chile in 2010: 8.8 and 0.003%
Haiti in 2010: 7.0 and 3.25%
Geography
10
The only way for geography to exogenously
influence growth outcomes is in its interaction
with other variables/determinants.
This has become an area of increasing interest
and research lately, largely due to Jeff Sachs.
Geography
11
Long ago, we considered three potential
interactions with geography:
1.) Diamond on technology across continents in
the very long run;
2.) Jones on technology within continents over
the long run;
3.) Sachs on markets across/within continents in
the medium run.
Geography
12
In the very long run, geography might determine
the agricultural technology available to a society.
A lack of domesticable animals and plants limits
population levels and density.
“Lower” levels of technology & higher
susceptibility to disease.
Geography
13
In the long run, geography might also determine
the general technology available to a society.
Lack of geographical barriers in much of Asia
gave rise to political consolidation in the face of
recurrent invasions from the steppes.
Thus, the Chinese, Mughal, Ottoman, Persian,
and Russian(?) empires.
Geography
14
But political consolidation also implied little
need for sustained inter-state competition.
In the European context, recurrent inter-state
competition led to the innovation and diffusion
of new military technologies.
This openness extended into areas not related to
warfare.
Geography
15
In the medium run, geography might determine
the trade opportunities available to a society.
For Sachs (1999), this explains much of the
disparity in economic performance across
nations after 1950.
The lack of access to waterways, remoteness
from trade partners, and the physical size of a
Geography
16
Lower levels of trade are associated with lower
levels of:
1.) competition,
2.) scale in production,
Geography
17
Of course, this key role for geography has long
been recognized by economists.
Adam Smith famously argued that the “division
of labour is limited by the extent of the market.”
But the “extent of the market” itself was
governed by:
Geography
18
What we want to do for the rest of the week is to
determine:
1.) whether geography can be treated as strictly
exogenous in the long-run (Sachs);
2.) the means by which geography interacts with
the other “usual suspects” (E & S).
Geography
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