Journal of Economic Literature 2013, 51(2), 1–45 http://dx.doi.org/10.1257/jel.51.2.1 How Deep Are the Roots of Economic Development? † Enrico Spolaore and Romain Wacziarg* The empirical literature on economic growth and development has moved from the study of proximate determinants to the analysis of ever deeper, more fundamental factors, rooted in long-term history. A growing body of new empirical work focuses on the measurement and estimation of the effects of historical variables on contemporary income by explicitly taking into account the ancestral composition of current populations. The evidence suggests that economic development is affected by traits that have been transmitted across generations over the very long run. This article surveys this new literature and provides a framework to discuss different channels through which intergenerationally transmitted characteristics may impact economic development, biologically (via genetic or epigenetic transmission) and culturally (via behavioral or symbolic transmission). An important issue is whether historically transmitted traits have affected development through their direct impact on productivity, or have operated indirectly as barriers to the diffusion of productivity- enhancing innovations across populations. (JEL J11, O33, O47, Z13) “The further backward you look, have evolved over time. Decades ago, the the further forward you can see” emphasis was on the accumulation of fac- (attributed to Winston Churchill).1 tors of production and exogenous techno- logical progress. Later, the focus switched 1. Introduction to policies and incentives endogenously affecting factor accumulation and innova- hy is income per capita higher in tion. More recently, the attention has moved Wsome societies and much lower in to the institutional framework underly- others? Answers to this perennial question ing these policies and incentives. Pushing * Spolaore: Tufts University, National Bureau of Eco- nomic Research, and CESIfo. Wacziarg: University of California at Los Angeles, National Bureau of Economic Research, and CEPR. We thank Leonardo Bursztyn, Janet 1 This is the usual form of the quote attributed to Currie, Oded Galor, David Weil, and several anonymous Winston Churchill—for instance, by Queen Elizabeth II referees for useful input. in her 1999 Christmas Message. According to Langworth † Go to http://dx.doi.org/10.1257/jel.51.2.1 to visit the (2008, 577), Churchill’s words were “the longer you can article page and view author disclosure statement(s). look back, the farther you can look forward.” 1 01_Spolaore_512.indd 1 5/22/13 10:31 AM 2 Journal of Economic Literature, Vol. LI (June 2013) back the debate one more degree, a key affecting income and productivity over question remains as to why the proximate the long run.2 We review the literature determinants of the wealth of nations vary on the legacy of geographic conditions in across countries. A burgeoning literature section 2. seeks to better understand the deep causes A major theme emerging from the recent of development, rooted in geography and literature is that key human characteristics history. affecting development are transmitted from As the empirical literature has moved one generation to the next within popula- from studying the proximate determi- tions over the long run, explaining why deep nants of growth and development to ana- historical factors still affect outcomes today. lyzing ever deeper, more fundamental A growing body of new empirical work has factors, important questions have arisen: focused on the measurement and estimation How much time persistence is there in of long-term effects of historical variables development outcomes? How far back in on contemporary income by explicitly tak- time should we go in order to understand ing into account the ancestral composition of contemporary economic development? current populations (Spolaore and Wacziarg Through what specific mechanisms do 2009; Putterman and Weil 2010; Comin, long-term geographic and historical fac- Easterly, and Gong 2010; Ashraf and Galor tors affect outcomes today? If economic 2013). We survey contributions to this new development has deep historical roots, literature in section 3. what is the scope for policy to affect the In section 4, we provide a general taxon- wealth of nations? This article discusses omy to discuss different channels through the current state of knowledge on these which inherited human characteristics may issues, focusing on recent empirical work impact economic development. Our discus- shedding light on the complex interactions sion builds on an extensive evolutionary lit- among geography, history, and compara- erature on the complex interactions among tive development. Throughout, we illus- genetic, epigenetic, and cultural transmis- trate the major milestones of the recent sion mechanisms, and on the coevolution of literature in a unified empirical frame- biological and cultural traits (Cavalli-Sforza work for understanding variation in eco- and Feldman 1981; Boyd and Richerson nomic development. 1985; Richerson and Boyd 2005; Jablonka Our starting point is the long-standing and Lamb 2005), as well as on a growing debate on geography and development. literature on cultural transmission and eco- There is no doubt that geographic factors, nomic outcomes (e.g., Bisin and Verdier such as latitude and climate, are highly cor- 2000, 2001; Tabellini 2008, 2009; Alesina, related with development, but the inter- Giuliano, and Nunn 2013). An important pretation of this correlation remains hotly issue is whether historically transmitted debated. While some of the effects of geog- characteristics affect economic development raphy may operate directly on current pro- through their direct impact on productivity, ductivity, there is mounting evidence that or operate indirectly as barriers to the diffu- much of the correlation operates through sion of technological and institutional inno- indirect mechanisms, i.e., through the his- vations across populations. torical effects of initial geographic condi- tions on the spatial distribution of human 2 For recent discussions of these issues from differ- characteristics, such as institutions, human ent perspectives, see Galor (2005, 2011) and Acemoglu, capital, social capital, and cultural traits, Johnson, and Robinson (2005). 01_Spolaore_512.indd 2 5/22/13 10:31 AM Spolaore and Wacziarg: How Deep Are the Roots of Economic Development? 3 2. Geography and Development Table 1, column 1 shows that a small set of geographic variables (absolute latitude, the 2.1 Long-Term Effects of Geography percentage of a country’s land area located in tropical climates, a landlocked coun- The hypothesis that geographic factors try dummy, an island country dummy) can affect productivity and economic develop- jointly account for 44 percent of contempo- ment has a long pedigree, going back to rary variation in log per capita income, with Machiavelli (1531), Montesquieu (1748), and quantitatively the largest effect coming from Marshall (1890). A vast empirical literature absolute latitude (excluding latitude causes has documented high correlations between the R2 to fall to 0.29). This result captures current levels of income per capita and a the flavor of the above-cited literature docu- series of geographic and biological variables, menting a strong correlation between geog- such as climate and temperature (Myrdal raphy and income per capita. 1968; Kamarck 1976; Masters and McMillan While the correlation between geography 2001; Sachs 2001), the disease environment and development is well established, the (Bloom and Sachs 1998; Sachs, Mellinger, debate has centered around causal mecha- and Gallup 2001; Sachs and Malaney 2002), nisms. A number of prominent economists, natural resources (Sachs and Warner 2001), including Myrdal (1968), Kamarck (1976), and transportation conditions (Rappaport and Sachs and coauthors, argue that geo- and Sachs 2003). graphic factors have a direct, contemporane- In order to illustrate the main empiri- ous effect on productivity and development. cal findings of the contributions discussed In particular, Sachs (2001) claims that eco- herein, we punctuate this paper with our nomic underdevelopment in tropical coun- own empirical results based on a unified data tries can be partly explained by the current set, regression methodology and sample. negative effects of their location, which This analysis is not meant to be an exhaustive include two main ecological handicaps: low recapitulation of existing results, but simply agricultural productivity and a high burden of to illustrate some important milestones in diseases. Tropical soils are depleted by heavy the recent literature. We use, alternately, log rainfall, and crops are attacked by pests and per capita income in 2005 (from the Penn parasites that thrive in hot climates without World Tables version 6.3) as a measure of winter frosts (Masters and McMillan 2001). contemporary economic performance, and Warm climates also favor the transmission of population density in 1500 (from McEvedy tropical diseases borne by insects and bacte- and Jones 1978) as a measure of economic ria, with major effects on health and human performance in 1500, and regress these on a capital. In sum, according to this line of variety of proposed determinants of develop- research, geography has direct current effects ment, starting here with geographic factors.3 on productivity and income per capita. Other scholars, in contrast, claim that 3 As is well