6 - Geography, Institutions, Clime, Genetics & Development Flashcards Preview

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Flashcards in 6 - Geography, Institutions, Clime, Genetics & Development Deck (30):

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