At the annual World Bank Conference on Development Economics this week, Jeffery Sachs and John Luke Gallup of Harvard presented a paper highlighting the importance of geography in economic outcomes.
They looked at data for 150 countries and noted how temperate countries were generally rich and tropical ones generally poor. The most favourable factors, according to the study, are in the Northern hemisphere, temperate zone, coastal, non-socialist and war-free. The 24 countries enjoying all these factors have a per capita income of $ 16,483. Being sub-tropical reduces income on average by $ 3,969, being in the southern hemisphere lops off $ 4,540, being socialist (in the Marxist rather than Feb-Jan sense) lops off $ 9,267, and being ‘land-locked’ $4,954.
Looking at the underlying causes, Sachs and Gallup conclude that:
- Tropical regions fare worse because of higher disease (malaria has a startling correlation with poverty) and lower agricultural productivity.
- Coastal regions entry low transport costs and access to international trade. Land-locked areas without river access to the sea have high transport costs and so fare badly.
- Population growth today is lowest in areas with the best geography, highest in those with the worst.
The authors come to four major conclusions. First transport must be improved in land-locked countries and the deep interior of all countries. Second, migration is likely on a large scale from geographically unfavourable regions. Third, the worst-off geographical areas are like to get even worse because pollution growth tends to be lastest there. Fourth, massive funding is indeed for research in tropical diseases and crops, to overcome the fundamental disadvantages of the tropics.
I find the Sachs-Gallup paper shallow, unhistorical and incomplete even in regard to geography. True, temperate zones are the most prosperous today. But all the ancient civilizations – Mesopotamia, Egypt, India, China-took off in subtropical river valleys, not temperate coastal areas. Tropical areas have the most sunshine, so crops grow faster there, and this is why civilisations first began there. I am astonished by the claim of Sachs-Gallup that farm productivity is fundamentally higher in temperate zones. Higher technology in the last few centuries has produced high yields in colder climates, but technological superiority is not geographical superiority. Note that wheat is a one-year crop in temperate zones but grows in four months in India, so for a proper comparison, we need to compare yield per year (many tropical farmers grow three crops in the year).
India and China were by far the greatest industrial powers in the world till the Industrial revolution. Technology, not geography, helped temperate agriculture and industry to zoom ahead.
Disease is a major problem in the tropics. But the same hot weather that helps bacteria breed also helps crops growth fast. Malaria did not prevent the ancient tropical civilisations from being the most advanced in their time.
Obviously access to the sea lowers transport costs and aids economic growth. Yet this mattered less in earlier centuries. The original silk route from China to Europe used the camel rather than the ship. Only when ship design became advanced from the 15th century onwards did sea-borne trade gain centre-stage.
In the 1980s, the United Nations passed a resolution calling for special measures to help land-locked and island-developing countries, which suffer from severe transport disadvantages. Prof T N Srinivasan tested this notion statistically, and found no correlation between poverty and being land-locked or an island economy. While some land-locked and island countries are certainly very poor, island nations like Singapore, Taiwan and Hong Kong have become richer than European ones. In Africa, the biggest successes are Botswana (which is land-locked) and Mauritius (an island economy).
Why does the Sachs-Gallup study show land-locked countries in more desperate straits than Srinivsan’s earlier work? Because, I suspect, the break-up of the Soviet Union created a large number of poor land-locked countries. This is history rather than geography.
Note that Europeans migrated in enormous numbers to warmer climates from the 17th century onwards. Australia was always far richer than Europe despite being sub-tropical. Sachs-Gallup attribute to this to the fact that Australia was settled by Europeans. But this surely is history, not geography.
Geography matters. But the most unfavourable geographical locations can be made prosperous by good policy. Land-locked Switzerland and Austria are amongst the richest in Europe. Sachs-Gallup point to Uttar Pradesh as an interior state made poor by high transport costs. But had they looked even further inland they would have come to Punjab, which is the richest state in India. Mauritius, hundreds of miles off the African coast with high transport costs, is the richest in Africa. The remote island nation of Maldives is the richest in South Asia (with a per capita income of $ 900 against India’s $ 320).
Apart from good policy, technology can make geography irrelevant. Through most of history, high-temperature areas were dusty and difficult to work in (only mad dogs and Englishmen go out in the noon-day sun of India, said Kipling). But air-conditioning has in the last 50 years transformed working conditions in the tropics. In the USA, the massive shift of the economy and population from New York to California and Texas would not have been possible without air-conditioning.
Similarly, I suspect the success of South-East Asia in manufacturing would not have been possible without air-conditioning. Not only does this improve work conditions, it also cuts out dust and improves product quality. Thailand, Singapore and Malaysia are all massive net exporters of computer and telecom equipment, which requires air-conditioned factories.
Geography is also being conquered by the recent rise of air cargo, which has become economic in the last three decades. But for this Delhi could not have overtaken Calcutta as an export centre.
Finally, the communications revolution has shrunk distances. Bangalore has become the software capital of India, with Hyderabad a close second. Both are land-locked, but satellite communications enable them to link up with cities anywhere in the world at low cost.
Thus, technology has made it possible to. conquer geography. Provided a country follows the right policies and creates good infrastructure, geography will not matter. Still, I agree with Sachs-GalIup that the conquest of poverty requires more R and D in tropical agriculture and medicine. Their paper proves, ironically, that faulty analysis can sometimes yield defensible conclusions.