Geography Matters Even if it Doesn't

Posted by {"login"=>"dvollrath", "email"=>"[email protected]", "display_name"=>"dvollrath", "first_name"=>"", "last_name"=>""} on July 23, 2014 · 3 mins read

Acemoglu and Robinson have been running a series of posts on the work of James Scott. Their latest regards the role of geography versus institutions.

Their post is an explanation for why the dispersion of population away from navigable rivers and coasts in Africa and Asia is likely the result of state formation. They cite James Scott pointing out that creating distance from the center/hub of the state is one effective, final way of limiting the influence that state can have on you. So the geographic dispersion we see in these continents may be a response to the centralizing efforts of early states (or colonizers).

And that is all well and good. It certainly seems like a plausible idea to explain geographic dispersion. What I do not understand is why this somehow shows that geography does not matter for development. The fact that the geographic dispersion of the population in Africa and Asia has some origin in the politics of state formation doesn't mean that this dispersion is somehow meaningless for development.

They explicitly cite the Gallup, Sachs, and Mellinger paper that proposes (among other things) this dispersion as a source of under-development. Rivers and coasts make trade less costly, and boosts incomes. By living far from these places - and in having fewer navigable rivers to begin with - Africa and Asia have relatively high trade costs and hence lower development. How is that invalidated by the idea that the population is dispersed because of a need to escape authority? Short answer, it's not. The fact that they can explain why a geographic disadvantage arose does not mean that it is not a disadvantage.

Being able to back up one step in history is wonderful for our understanding of economic development, but it does not prove anything. We can do some infinite regress where we bounce back and forth from institutions to geography: populations are disperse because of state formation, state formation was centered around high productivity agricultural areas, high productivity agriculture was due to innovations made possible by property rights, property rights only arise in places with land worth owning because of its fertility, etc. etc.. None of those steps imply that geography or institutions is better at explaining economic development.

Which is why I don't understand the tendency of the Acemoglu and Robinson body of work to insist that institutions matter to the exclusion of all other factors. Yes, institutions (so broadly defined as to capture really anything you like) seem really important. But they are not the exclusive determinant of relative development, are they? Should I literally think that the poor agricultural land, lack of accessible waterways, and absence of valuable commodities in Ethiopia are meaningless to that country's poverty? I don't think so. The fact that improving institutions in Ethiopia would make it wealthier does not imply that it's geography has not been a drag on its development.