The statistics of geography: income and growth
Though there is lots of empirical evidence linking geography to levels of
income and economic growth there is an important critique of the geography
hypothesis – the ‘reversal of fortune’ thesis.
We noted in the Introduction that Robert Barro found the growth process
works differently in Africa but offered no explanation as to why this was the
case. More recently Jeffrey Sachs has returned to this problem. When control-
ling for initial income in 1980 and indicators of governance, Sub-Saharan Africa
grows more slowly (by around 3 per cent a year) than other developing countries
(Sachs et al., 2004). The reason, he argues, is geography. The idea of geography
also features prominently in the best-selling recent work of Paul Collier. Collier
(2007) states there are four traps preventing sustainable economic growth in
countries containing the bottom impoverished billion of the world’s population.
Two of those traps relate directly to geography – the natural resources trap and
the trap of being landlocked with bad neighbours – while the conflict trap and
the bad governance trap are both influenced by natural resources.
More than any other deep determinant of growth, evidence on geography is
straightforward to come by. A global map showing GDP per capita in the mid-
1990s of every country in the world reveals two clear geographical correlates
of economic development. First, tropical countries (those nearer the equator)
are poor and second, landlocked countries are poorer than countries with
access to the coast. Nearly all landlocked countries are poor except for some in
Western and Central Europe; these are deeply integrated into the large
European market of low-cost trade and are easily accessible to the coast by
land- and river-based traffic. These results are also supported by numbers.
Countries with half or more of their land in tropical regions are almost all poor.
In the mid-1990s there were 72 such countries, with 41 per cent of the world’s
population. Of the top thirty richest countries in the mid-1990s, only two were
tropical (Hong Kong and Singapore), four were sub-tropical and 23 had
temperate climates. Regions within the US, Western Europe and temperate-
zone East Asia that lie within 100 km of the coastline account for 3 per cent of
the world’s inhabited land area, 13 per cent of the world’s population, and 32
per cent of the world’s GDP (measured by PPP).
There are a number of econometric studies that test the influence of various
geographic variables on growth. The advantage of these is that a measure of the
exact influence can be derived and compared with other factors (see
Introduction). Gallup and Sachs (1999) use data from 150 countries with popu-
lations above 1 million for the period 1960 to 1990 and control for variables
related to economic and political institutions. They find four variables (the
prevalence of malaria, transport costs, the proportion of the population near the
coastline,and coal resources per capita) explain more than two-thirds of the
cross-country differences in average incomes. They obtain the same results for
non-Sub-Saharan African countries, showing that the results for geography are
not peculiar to Africa. The effect of the malaria variable, they find, is more
Geography and Economic Resources 233