Geography and Economic Growth

by on February 13, 2016 at 7:25 am in Economics, Education | Permalink

A 3-minute introduction to the effect of geography on economic growth drawing on some of Jeff Sach’s classic works. Includes some surprising facts about continents and coastlines!

This video is from our Principles of Macroeconomics course. We cover the multiple ways in which geography can influence growth in more depth in two sections of our Development Economics course.

1 Alan February 13, 2016 at 9:59 am

Check your privilege there sailor!

2 jim jones February 13, 2016 at 10:28 am

I look forward to the day when we see an Economist write an article on “Genetics and Growth”

3 FYI February 13, 2016 at 11:36 am

Yeah, as a general principle for the “old” economy this applies. But we live in a time now that this difference should be much smaller, right? What exactly is this “land lock tariff” now a days? Is Colorado really that much poorer than say, South Carolina? Why even the coastal countries in Africa are still so poor compared to other regions? Actually, why do we have so many land locked countries in Africa compared to other continents? (Asia is enormous but it has organized itself so most countries have an exit to the sea).

Those are questions that would be much more interesting to address.

4 Alex Tabarrok February 13, 2016 at 11:56 am

See our Development Economics course where we cover many of these issues. Today’s video is only 1 in a much larger course.

http://www.mruniversity.com/courses/development-economics-0

5 FYI February 13, 2016 at 12:09 pm

Thanks Alex, I will check it out!

6 AIG February 14, 2016 at 8:41 pm

We invented trains, planes, trucks, pipelines etc. Although it is still much cheaper to move bulk with ships, it is also much cheaper to locate your business or population in low-density areas away from coastlines. When you no longer need massive shipments of coal, but rather pipelines of oil and gas, then location becomes less of an issue.

So you can certainly still have wealthy centers far away from the coasts, but the density of such population/industrial centers will need to be much lower. (you can only have so many Denvers and SLCs and Minneapolis type cities that far from the coast).

The example of Africa is of course, total BS. Most of Africa’s population does live nearby the coast or major rivers, much more so than Europe’s population. So it can’t be an explanation since comparatively speaking, they have a greater access to the sea than Europe or Asia or the US. I.e. Alex is making the mistake of equating geographic area with population density. Nobody lives in the Sahara or the jungles of Congo.

7 JK Brown February 13, 2016 at 1:51 pm

Seems to me, you can also see some impact of geography on land transport. You can see the European plain, which would be an easy terrain for roads and rail. Also, you can see the impact on the interior of the US, not only east of the Mississippi, but also across the Plains.

Stepping back it is easy to see Western Europe as it peninsula. But a bit more to see that with the Great Lakes, the eastern US is also a broad peninsula with the added benefit of a great navigable river across its interior. Even the mountain ranges on the American “peninsula” facilitate transport along north/south axis to bodies of water with global sea access.

Look at this map of drainage basins in Africa. I seems to show the real difficulty of being landlocked in Africa since there are so many and each funnels down to an easy choke point. https://en.wikipedia.org/wiki/Geography_of_Africa#/media/File:Karte_der_Einzugsgebiete_der_großen_Gewässer_Afrikas.png

Now compare the watershed of the US. https://imgur.com/iQP6Bnn
And Western Europe http://www.spp-haefen.de/uploads/pics/UEbersichtskarte_Lage_Karlsgraben_in_Europa_2013_01.jpg

8 Peldrigal February 15, 2016 at 7:23 am

You would be surprised at how little of Western Europe is plains. And think about how poor are the plains of Eastern Europe. Most important historical centers of trade in Europe are along major riverways.

9 Harun February 13, 2016 at 3:07 pm

This suggests landlocked African nations would be wise to focus on software which doesn’t require any “shipping.”

Funny, its right there: shipping and handling. Did you receive your shipment…when most shipments don’t use ships!

10 Nathan W February 13, 2016 at 6:29 pm

I was working a few guys in Burkina Faso on a djembe export plan.

Which led me to conclude that your line of thinking is pretty sensible. Except that most of the stuff they make is heaviesh for price.

11 Harun February 14, 2016 at 3:08 pm

There are products that are air-freighted: flowers, microchips, etc.

That would be another possibility.

12 Aixa February 14, 2016 at 8:05 am

In Central and Eastern Europe landlocked countries are usually richer then corresponding coastal countries.
Austria and Switzerland are richer then Germany
Czechia > Poland
Hungary > Romania
Luxembourg > Belgium
The same phenomenon is within countries. Landlocked regions are usually richer then nearby coastal regions,
Bavaria > Lower Saxony
Saxony > Meclenburg Vorpommern
Dolnoslaskie > Zachodniopomorskie
Slaskie > Pomorskie
Lombardia > Toscana
Trentino > Veneto – although it is Venetia mentioned as privileged coastal city in the video

13 Todd Kreider February 15, 2016 at 1:20 am

Another great video. I was expecting something more like Krugman’s geography on economic growth. That would also make a real good lesson.

14 Alex February 15, 2016 at 10:15 pm

So, in the end, how much can Africa develop? Does geography mean the continent can never reach developed country status?

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