openness with the rest of the world). Chapter 10 explores the deeper determi-
nant widely assumed by many scholars to be the most important: institutions.
Institutions influence economic growth through their impact on the incentives
to invest in physical (or human) capital or through stimulating technological
diffusion or innovation and through this total factor productivity (TFP). The
most widely discussed institutions are the political system and property rights.
Chapter 11 discusses geography. An adverse disease environment may under-
mine health and so the acquisition of human capital through schooling or
learning on the job. Being landlocked and isolated from international trade
may reduce the incentives for entrepreneurs to invest in export-oriented
sectors. Adverse weather conditions may directly influence the agricultural
output of land. The availability of natural resources may influence output
directly (exporting oil) or indirectly (good soils boosting output from agricul-
ture). Chapter 12 finds that culture influences whether countries are open to
ideas and innovation from overseas and considers how countries cope with the
changes associated with economic growth, urbanization and innovation.
Culture may affect the supply of labour via prohibitions on women working
outside the household or attitudes to labour affecting labour productivity and
so TFP. Culture may also affect investment by influencing attitudes related to
savings. Chapter 13 explores how openness can influence economic growth
through its impact on the supply of labour (immigration or migration), the
supply of capital (FDI or the drain of surplus), through changing the incentives
to invest (expanding domestic productive capacity to export onto world
markets) or influencing productivity (through competition from the world
market, exposure to new ideas and the ability to import technology from the
rest of the world).
146 Patterns and Determinants of Economic Growth