The deep roots of development

Enrico Spolaore and Romain Wacziarg have put out a nice review article on long-term economic growth and the intergenerational transmission of development. Below are some of the more interesting parts.

They note two important papers (which I intend to write more detailed posts about at some stage) by Louis Putterman and David Weil, and by Comin, Easterly and Gong. They write:

[Putterman and Weil] examine explicitly whether it is the historical legacy of geographic locations or the historical legacy of the populations currently inhabiting these locations that matters more for contemporary outcomes. …

Putterman and Weil’s results strongly suggest that the ultimate drivers of development cannot be fully disembodied from characteristics of human populations. When migrating to the New World, populations brought with them traits that carried the seeds of their economic performance. This stands in contrast to views emphasizing the direct effects of geography or the direct effects of institutions, for both of these characteristics could, in principle, operate irrespective of the population to which they apply. A population’s long familiarity with certain types of institutions, human capital, norms of behavior or more broadly culture seems important to account for comparative development. …

The deep historical roots of development are at the center of Comin, Easterly and Gong (2010). They consider the adoption rates of various basic technologies in 1000 BC, 1 AD, and 1500 AD. in a cross-section of countries defined by their current boundaries. They find that technology adoption in 1500, but also as far back as 1000 BC, is a significant predictor of income per capita and technology adoption today.

Spolaore and Wacziarg also note Easterly and Levine’s paper on the link between European settlement and economic growth (a later version of which I mentioned last week).

Spolaore and Wacziarg were the authors of The Diffusion of Development, about which I have previously posted. In that paper, they proposed that genetic distance acts as a barrier to technology transfer, so that when one population becomes more technologically advanced, even if through luck, the barrier to transfer results in differences in economic development. In this new paper, they explain the mechanism as follows:

[T]he mechanism need not be a direct effect of those traits (whether culturally or genetically transmitted) on income and productivity. Rather, divergence in human traits, habits, norms, etc. have created barriers to communication and imitation across societies. While it is possible that intergenerationally transmitted traits have direct effects on productivity and economic performance (for example, if some parents transmit a stronger work ethic to their children), another possibility is that human traits also act to hinder development through a barrier effect: more closely related societies are more likely to learn from each other and adopt each other’s innovations. It is easier for someone to learn from a sibling than from a cousin, and easier to learn from a cousin than from a stranger. Populations that share more recent common ancestors have had less time to diverge in a wide range of traits and characteristics – many of them cultural rather than biological – that are transmitted from a generation to the next with variation. Similarity in such traits facilitates communication and learning, and hence the diffusion and adaptation of complex technological and institutional innovations.

Spolaore and Wacziarg also mention the other (few) core papers or books in the field of biology and economic growth – by Gregory Clark, Galor and Moav and Ashraf and Galor. It is still a short list.

One of their conclusions for this review is that greater focus should be on populations and not locations:

The importance of controlling for populations’ ancestry highlights the second message from this literature: long-term persistence holds at the level of populations rather than locations. A focus on populations rather than locations helps us understand both persistence and reversal of fortune, and sheds light on the spread of economic development. The need to adjust for population ancestry is at the core of Putterman and Weil’s (2010) contribution, showing that current economic development is correlated with historical characteristics of a population’s ancestors, including ancestors’ years of experience with agriculture, going back, again, to the Neolithic transition. The overall message from Comin, Easterly and Gong (2010), Putterman and Weil (2010) and several other contributions covered in this article is that long-term historical factors predict current income per capita, and that these factors become much more important when considering the history of populations rather than locations.

The article also has some interesting thoughts on gene-culture coevolution (is there anything else?) and is generally worth the read.

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