The Geography of Underdevelopment : Institutions and the Impact of Culture

The central question at the heart of the book rests on why the differences in comparative development across the world have a geographical pattern. Past studies have argued for the primacy of geography or institutions as the reasons for these differences. The book will argue that there is a missing link in this puzzle the role of culture and its impact either directly on development or indirectly through the establishment of institutions. It will suggest that geography, which tends to be assigned a peripheral role through its influence on institutions, may be responsible for aspects of cultural evolution, which in turn have an effect on institutional development. The relationship between geographical factors and economic development has historically been ignored by economists. However, views about the correlation between temperature and climate have been expressed in works dating as far back as Montesquieu (1748) and Huntington (1915). The first part of the book will present research that examines specific features of climate, namely temperature and rainfall, as possible factors that might influence productivity and hence income per capita across countries. At the same time another group of researchers have argued that it is not geography per se that has dictated the fortunes of countries but the institutions that were in place in those countries that eventually determined whether they would succeed or not. The 'geography versus institutions' hypothesis has enjoyed a vigorous debate in the literature. A seminal paper in the field allows for an indirect effect of geography by arguing that those countries whose climates were more suited to settlement by white Europeans developed more participatory and democratic institutions whereas those countries in which Europeans had higher mortality rates due to diseases to which they had no immunity (the effect of an inhospitable climate), were exploited and thus the institutions that developed were reflective of that legacy (colonialism). Thus, the second part of the book will visit the issues posed above, by examining the case of the United States and drawing parallels between regional disparities in the U.S. and global disparities between developing and industrialized countries. The U.S. is an excellent example of a geographically (and climatically) diverse area where there was considerable disparity amongst the states in income per capita 130 years ago. The book will explore what economists and historians have written, about the reasons for the divergence in income in the pre-1940 South and then build the case for a comparison of the South to contemporary developing countries. Using empirical data on labour productivity and climate, evidence will be discussed which shows that both geography (location and climate) as well as institutions played significant roles in shaping the economic successes of U.S. states, although the effects of these variables have dissipated over time. However, the question of how institutions themselves are formed is still not satisfactorily answered. This is an issue that economists have consistently struggled with since it involves notions of culture which are not clearly defined in economic theory. Economists have also ignored the contributions of other disciplines, especially anthropology and sociology where more well-defined notions of culture exist. The third part of the book will make a case for the link between geography, culture and institutions. Two questions are asked. First, does geography influence culture and secondly, does culture influence institutions? The importance of cultural beliefs and practices in influencing economic development is presented as a missing link in the chain of causality from geography to economic development. Neo-Darwi...