L2 - geography Flashcards
(14 cards)
questions + answers from conclusion
- Where in the World is Least Developed?
- tropical landlocked places, esp. Africa, South Asia - How does Geography affect Development?
- barriers to trade, technology, productivity and health - Why Geography isn’t enough
- places with the same geography have developed very diff over time
-> political choices must matter - How do Natural Resources affect Development?
- resource curse that places competition for rents at the center of politics
- can be avoided with strong institutions, but resources harm institutions
- Where in the World is Least Developed?
on the list: most dev. is Indonesia, last is Chad
- our main ideas based on media stereotyping, but also based on reality
multidimensional poverty concentrated in Sub-Saharan Africa
how does geography affect development?
some countries are ‘doomed’ to not develop?
- tropical: 1.5% points slower growth + 7y lower life expectancy
- theory: within Cancer and Capricorn you are poor -> matches with the real map of multidimensional poverty - landlocked: 0.6% slower growth
- also seems to explain it
5 reasons why geography affects dev.
- transportation and coordination costs limit trade and globalization (which are necessary for economic development)
- moving stuff over land is expensive -> landlocked countries suffer - climate limits agricultural and labour productivity (Sachs)
- best productivity: Europe, thin line Africa, part China and India
- tropical areas have to import stuff - burden of tropical diseases reduces growth by 1% point
- Malaria deaths concentrated in poor/tropical areas
- survivors also suffer: get it repeatedly, can’t work and go to school -> school dropouts - ‘Eurasian’ crops, animals and technologies can’t be transferred to tropical contexts (Diamond)
- Europe grew fastest and first bc lucky with best biological starting point (crops and mammals: cattle, horses = domesticable -> more productivity), others didn’t have same opportunities
- same ecological conditions -> you can spread ideas about productivity, but doesn’t work in diff ecological conditions (-> innovation only spreads east-west, not north-sound)
- historical argument Diamond - vulnerability to natural disasters damages infrastructure and causes conflict
- why invest if you know it will get destroyed?
- climate change is concentrated in tropical regions -> problem will get worse
- after natural disasters, we fight about it rather than helping
why geography isn’t enough
4
- Tropical/landlocked countries can develop
- Singapore, Shenzhen/Guangzhou (tropical place, but dev.), Costa Rica; Botswana, Switzerland
- Challenges are not permanent, eg. Cuba, Paraguay have eliminated malaria
- Switzerland was able to defend itself from invasions bc mountains (also geography) -> more dev.
- Switzerland has rivers + is landlocked between developed countries -> more dev.
- Local variations in development where geography is fixed
- e.g. North vs South Korea: North is less developed, while same geographical conditions
- until 70s GDP similar, they diverged despite same geography
- A lack of convergence
- Differences in crops, animals and technologies have been eradicated by trade
- Why is Nicaragua still poor today?
- lack of convergence diff to explain with globalization
- A ‘reversal of fortunes’
- The US has overtaken Latin America
- But Central America has not, despite hosting the Mayans and Aztec
- places that are rich today were not always the richest
- tropical, landlocked places used to be rich (Teotihuacan, Mexico, Edo Kingdom, etc.)
- geography hasn’t changed, but who has developed has
- richness: 1500 India, Mexico, China, Europe, Nigeria were doing really well, US wasn’t, 2018 US, Canada got rich, India, Africa and China got poorer
sure: some places have more barriers than others, but we need to understand history, politics etc. to understand
how do natural resources affect development?
- economic effects
having resources (part of geography) directly correlates with GDP per capita
yet they are poorer, less developed, not richer
natural resource curse: countries with natural resources are poorer, not richer
why?
- Prebisch-Singer Hypothesis = commodity prices decline relative to manufactured goods over time
- if you want to grow, you need to be in manufacturing business
- empirics don’t always match up
- main issue is probably point 2 - commodity prices are VOLATILE
- volatility -> hard to plan your budget: you can’t control the prices -> undermines public financial management and planning - natural resource rents NO SPILLOVERS to the rest of the economy
- industry runs on imported tech
- resources sit on their own, don’t benefit the rest - DUTCH DISEASE - selling commodities pushes up the exchange rate, harming other exports
- male-dominated mining areas create gendered risks and inequality
- they are in rural areas
- sex trafficking, drugs, etc. because they are rich and poor
- e.g. an increase in HIV/AIDS
- e.g. La Rinconada, Peru - 4500 women sex trafficked (>10% population)(to meet demand miners)
BUT: all can be mitigated and managed with careful government action
- stabilization funds
- investing in diversification
Dutch disease
selling commodities pushes up the exchange rate, harming other points
called Dutch Disease bc natural gas in Groningen 1950s -> selling it abroad
how it works:
- you find natural resources
- you want to sell it abroad
- they have to convert their currency
- high demand for your currency
- price for your currency goes up (more expansive currency)
- okay for the people selling the natural resources BUT not for other exporters (buyers have to pay a lot for the currency -> go buy somewhere else) = makes the rest of your econ less competitive
!don’t need to know all the details, but a decent understanding is important
concept slide - rents
= unearned or ‘excess’ incomes, above normal eg. compared to the cost of production
natural resources have high rents, high profit margins: they are relatively cheap to extract and can be sold at high prices
- diff cost of production and sale price
can explain corruption as effect of natural resources
how do natural resources affect development? political effects
(Ross reading)
resources ->
- myopia = due to ‘easy’ money that finances patronage
- but leaders often try to stay for decades
- rents are easy money + so much cash going into the companies and government that they just start spending it, they take it for granted and the fut
- myopia = being short-sighted
- resources get you over-excited so you don’t think about the future - capture/corruption: beneficiary interest groups (subsidized industries) lobby to keep rents
- but resource states are rich enough to resist
- corruption scandal Zuma and Guptas brothers (owning mines South Africa) - authoritarianism: leaders more secure (use resource rents) and transition to democracy less likely
- but more revenue also reduces elite’s fear of taxation under democracy - conflict: extortion and fighting for resource control
- but resources can fund security forces
- diamond money used to buy weapons to heighten the conflict
- resources finance conflict, e.g. gangs in Nigeria can find the army - RENTIER STATES (big one): competition focused on controlling the state for wealth
- less need for tax collection undermines the social contract
myopia =
due to ‘easy’ money that finances patronage
- but leaders often try to stay for decades
- rents are easy money + so much cash going into the companies and government that they just start spending it, they take it for granted and the fut
- myopia = being short-sighted
- resources get you over-excited so you don’t think about the future
Rentier states
(big one)
natural resources ->
competition focused on controlling the state for wealth
- less need for tax collection undermines the SOCIAL CONTRACT
- it is just easy money, no one is being held accountable
- cozy alliances between interest groups and gov rather than citizens and gov
- to win you need to know how to corrupt
- money not from taxes -> people don’t hold gov accountable
(when money comes from taxes, people vote politicians out)
resource curse is not inevitable
- Norway - oil was discovered in 1969 after it developed strong democratic institutions
- Botswana - second largest diamond deposits in the world, but rents were well managed by the elite that continued from the pre-colonial era
- should be victim resource trap + is tropical and landlocked, but is one of the most developed countries in Africa
- already had inclusive state that continued past decolonization = unique continuity
how do natural resources affect development - the better question
under what condition do natural resources harm development?
- when they generate large, state-controlled rents
- when resources are controlled by nationalized firms
- WHEN INSTITUTIONS (POLITICS) ARE WEAK ALREADY
conclusions
where in the world is the least developed?
- tropical landlocked places, esp. AFrica, South Asia
how does geography affect development?
- barriers to trade, technology productivity and health
why geography isn’t enough
- places with the same geography have developed very diff over time
- political choices must matter
how do natural resources affect development?
- a resource curse that places competition for rent at the centre of politics
- can be avoided with strong institutions: but resources harm institutions
