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ic one parts of it are like reading a history textbook where it becomes a list of events and names without a lot of context i do like his summary of what drives history change is caused by lazy greedy frightened people looking for easier more profitable and safer ways to do things and they rarely know what they re doing the larger theme of the book is interesting morris stakes out a position that geography is really why the west rules at this point somewhat fixed characteristics like soil and general weather patterns ensured that western europe and china were bound to be relatively rich compared to most of the world the additional advantages of western europe were the relatively easy access they had to the geographic bonanza of the new world which itself was due to the particular fact that native americans died from european diseases and not vice versa given my not overwhelming recommendation of morris specific book let me offer you some additional books that make the case for geography and or biology being a major factor in economic development plagues and peoples by william mcneill guns germs and steel the fates of human societies by jared diamond the wealth and poverty of nations why some are so rich and some so poor by david landes not the whole book but the early chapters focus on geography the european miracle environments economies and geopolitics in the history of europe and asia by eric jones probably my favorite in this list i could go on but i run into the wedding invitation problem if i recommend another book in which geography features strongly like empire of cotton i feel compelled to recommend the other 10 books that i find similar in scope or quality pretty soon we re talking about a long list so stick with these for now as your entree to the world of geography as a determinant of development morris and these other authors are often accused of geographic determinism this is often slung about as a kind of epithet implying that the author means that world economic history had to come out exactly like it did because of geography this bothers people because it seems to exonerate western europeans from all the awful things they did along the way to becoming rich it can also be easily twisted into arguments about how europeans are superior to other races or groups of people but that is setting up straw men in place of what these authors actually say the mistake is to think that by asserting geography matters this denies any role for human agency geography sets the budget constraint affecting the slope i e relative cost of land versus labor and intercept i e how many people land can support but people set the utility function making the choices about production consumption and innovation to say that geography matters for development is to say that incentives matter that s all geography creates some subtle and some not so subtle differences in the constraints facing people and they react accordingly they look for easier more profitable and safer things to do within their given geographic conditions it is also a mistake to think that geography implies that relative development levels must be constant over time certain geographic characteristics are fixed for all intents and purposes north american is closer to europe than to china but nearly all other characteristics that we could lump under geography change over the course of human history think of the climate with little ice ages and the medieval warm period and technological changes can make geographic characteristics change in their influence on development think of oil geography doesn t say that some populations are supposed to be rich that they deserve to be rich or that they will always be rich it says that it isn t terribly surprising that they are rich right now imagine that we could rewind and rerun human history over and over and over again each time set the clock back to 15 000 bc and then let things go each time it would be different as all the millions of coin flips in history came up heads or tails geography means the coins are not fair europe blessed with productive agricultural land lots of internal waterways access to oceans etc etc comes up heads 55 of the time africa with tough agricultural conditions a bad disease environment and a lack of natural transport networks comes up heads only 45 of the time over those thousands of versions of history it would tend to be the case that europeans would be relatively rich so when these authors say geography matters take that as a statement similar to saying that a coefficient in a regression matters it s a statistical statement that the coefficient on geography is significant not that the r squared of the regression is 100 share this share on x opens in new window x share on facebook opens in new window facebook share on reddit opens in new window reddit email a link to a friend opens in new window email like loading posted in uncategorized tagged development environment geography growth history reading 3 replies market failures in developing countries posted on january 22 2015 by dvollrath 11 note the growth economics blog has moved sites click here to find this post at the new site i just came across a new world bank paper by brian dillon and chris barrett about agricultural factor markets in africa dillon and barrett have written an old school development paper meaning it reminds me of papers written in the 1980 s and 1990 s they use observational data and appeal to theory to motivate their empirical identification in an attempt to answer a classic development question this is going to be really distressing nomenclature to the development economists from that era who were new school when the field moved beyond the old school work by lewis schultz and others from the 1960 s and 1970 s sucks to grow up i guess they test for household separation which means that the consumption decisions of a household i e how much or what to eat are completely divorced from the production decisions i e how much or what to plant if there are complete markets then household separation is expected to hold if you live in a modern western country then you face effectively complete markets and your decision about what to consume a new tv is completely unaffected by what you do at work accounts payable all that matters is that you make money producing and then you spend that money on goods and services if markets are missing completely or so unreliable as to effectively be missing then household separation fails the extreme case is easiest to think of if a household is completely autarkic and can trade with no one else then it can only consume what it produces the two decisions are inseparable if they want a new tv then they d better have a source of rare earth elements in their back yard and a passion for soldering the importance of knowing if household separation holds or not is that it tells us something fundamentally important about why a developing area is poor if separation fails because markets fail to exist then this is like saying there is a lot of latent economic activity that is not being realized household a and household b would be better off if one specialized in raising goats and the other in rice but because the markets for goats and rice don t exist they each have to raise both it s a basic comparative advantage argument households can be made better off just like we argue countries can by trading with each other if you want to enact policies or take action to assist these households then promoting functioning markets in outputs and inputs is the way to go how do you do that it could be by making institutional changes making property rights clear so land can be easily exchanged or providing insurance so people can take the risk of producing for the market or it might be as simple as paving a road so that transport costs are low enough to trade with the next town over it could be by promoting better information flows one of my favorite development papers is by robert jensen about the positive effect of mobile phone introduction on the efficiency of the fish market in kerala india if separation holds and by implication markets are functioning relatively well then the implications for development are different households are able to buy and sell so they are probably taking advantage of nearly all the gains from trade available they can likely benefit more from increased investments in factors of production than households without access to markets here s what i mean when markets are reasonably close to complete then endowing a household with a tractor and the technical training to keep it running is a huge change in their productivity they can use it on their own farm and they can rent it out to others it may make sense for them to become a full time tractor operator in their village because with complete markets they know they can buy what they need using the proceeds of the tractor business in a non separating economy without markets giving a family a tractor and technical training is kind of a waste if they re well off for a developing country they ve got 2 hectares of land about 5 acres or just under 4 football fields yes the tractor can alleviate some of the workload but it s overkill you d spend more than half your time just turning the tractor around trying to plow that small of a space moreover the tractor would sit idle for the vast majority of the year without markets most investments and improvements in technology are not worth it okay back to dillon and barrett they use data from the living standard measurement surveys from 5 sub saharan african countries to test for household separation the logic of the test comes from a classic paper by benjamin 1992 if markets are functioning efficiently then the characteristics of your household age gender education number of kids should be unrelated to the input usage on your farm the production decision i need three workers to plant rice is separated from your household characteristics i have five workers in my household those extra workers in your household can go work on someone else s farm if markets exist and if you don t have enough household labor you can hire in laborers what they find is that across all five countries ethiopia malawi niger tanzania uganda separation fails meaning that there are significant failures in factor and or output markets in every country the size of the household is always significantly related to the amount of labor used on that household s land it doesn t matter whether the household is led by a male or a female or where the household is located within the country the failure of separation appears to be a general failure one thing to note is that this doesn t mean households fail to participate in markets at all dillon and barrett find that nearly all households do make some transactions in labor and land markets it is likely that the actual transactions costs fixed costs time costs etc of participating in the market are so high that people don t undertake all the trades that they would otherwise make so what does this mean it means that development assistance is likely to be most effective if it promotes making markets more efficient perhaps through encouraging better information flows like in the indian fish market example pure investment strategies let s give everyone a bag of fertilizer are unlikely to be as effective without the markets in place that allow people to take advantage of that investment research like this is particularly valuable to people like me who want to study growth and development from a macro perspective it reminds us beats us over the head with that developing countries and developing economies are not the same thing market failures mean that developing countries are really a collection of myriad small economies and therefore we need to be careful in thinking about things at too aggregate a level this is also an example of where i think the institutions literature could really add value can we provide better theories or models of what precisely it means for markets to fail what particular institutional details are important for markets to work efficiently share this share on x opens in new window x share on facebook opens in new window facebook share on reddit opens in new window reddit email a link to a friend opens in new window email like loading posted in uncategorized tagged development households markets 11 replies populations not nations dictate development posted on january 2 2015 by dvollrath 30 note the growth economics blog has moved sites click here to find this post at the new site one of the more intriguing empirical regularities in recent growth research involves population origins rather than thinking about rich and poor countries work by louis putterman and david weil tells us to think about rich and poor population groups europeans and native americans for example countries are rich if their population is made up of rich population groups and vice versa the u s is rich because it has lots of european descendants and relatively few native american descendants mexico in contrast is relatively poor because it has a few european descendants but lots of native american descendants the interesting aspect of these findings is that they suggest we are looking at the wrong units of observation so to speak in studying economic growth and development we should be studying the characteristics of population groups not countries and looking at the characteristics that make those groups prosperous relative to others i pulled two sets of results out of the survey by spolaore and wacziarg 2013 which is a great introduction to this material if you want more depth the first are regressions of output per worker in 2005 on either years since agriculture first began or years of state history i e how long organized political regimes have existed for each country columns 1 and 3 show that the country level measures of agriculture or state history are not relevant but if you weight the years since agriculture began or state history by population composition you get a different story as an example the weighted state history for the u s is a weighted average of the state history of england germany italy etc quite long as opposed to the state history of north america quite short the length of time that populations have had settled agriculture and organized states is highly correlated with output per worker today countries that have more history with economic organization are richer today spolaore and wacziarg s next table shows that even holding those features constant the share of europeans in the population of a country is highly correlated with output per worker today the upshot is that europeans and their descendants are rich as a group wherever they are in the world but not so for other population groups see easterly and levine 2012 for more robustness checks on this result this idea that some p...
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