How Deep are the Roots of Economic
Development?
Enrico Spolaore and Romain Wacziarg Journal of Economic Literature, 2012 Capital Technology Ins>tu>ons Culture Geography Income Direct Capital Technology Ins>tu>ons Culture Indirect Geography Income ? Capital ? Technology ? Ins>tu>ons ? Culture Geography ? Income Capital Technology Ins>tu>ons Culture Geography Income Defining Culture
  In the dic>onary: •  “the customs, arts, social ins>tu>ons, and achievements of a par>cular na>on, people, or other social group.” •  “the aItudes and behavior characteris>c of a par>cular social group.” (Google)   In Anthropology •  “ the range of human phenomena that cannot be directly aNributed to gene>c inheritance” (Wikipedia)   In Economics •  Preferences? Expecta>ons? Whatever is leR over aRer defining technology, ins>tu>ons and social capital?   In this paper: •  “informa>on capable of affec>ng individual’s behavior that they acquire from other members of their species through teaching, imita>on, and other forms of social transmission.” (via Richerson and Boyd, 2005) Capital ter-­‐genera>onally ransmiNed traits la4on characteris>cs) Technology Ins>tu>ons Culture/Biology Geography Income Overview
  Review and replica>on of key results regarding: •  Geography and Development •  Culture and Ancestry •  Taxonomy of Inheritance channels   Data: •  Log per capita income in 2005 from the Penn World Tables, version 6.3 •  Popula>on density in 1500 from McEvedy and Jones, 1978 •  Specific series from individual papers as noted (Bio)geography and Development
  Large literature documen>ng strong correla>ons between current income and biogeographic variables   Key Correlates: •  Climate and Temperature •  Disease •  Natural Resources •  Transporta>on Condi>ons Biogeographic Mechanisms
  Direct (detrimental) effects of tropical geography •  Sachs, 2001; Master and McMillan, 2001 •  Low agricultural produc>vity and high disease burden reduces contemporaneous produc>vity Biogeographic Mechanisms
  Indirect historical influences •  Diamond, 1997; Olson and Hibbs ,2005 •  Local domes>catable species and ease of agricultural technology diffusion (con>nental axis) give a head start on technology and disease (“guns, germs and steel”) •  Engerman and Sokoloff, 1997, 2002; Acemoglu, Johnson and Robinson, 2001,
2002; Easterly and Levine, 2003 •  Effects of crops and germs on the seNlement of European colonizers aRer 1500 •  Ashraf and Galor, 2011 •  Timing of agricultural transi>on as key channel for geographic effects (geography as IV) Reversals of Fortune
  Many regions which were rela>vely rich in 1500 are now rela>vely poor (and vice versa)   Different channels may have oppositely-­‐signed effects •  Engerman and Sokoloff, 1997, 2002 •  La>n-­‐American regions were more conducive to agriculture than Canada and the United
States at the >me of coloniza>on, but are now substan>ally poorer. Cash crops may hav
supported poli>cal and economic inequality •  Acemoglu, Johnson and Robinson, 2002 •  Colonizing powers may have implemented ‘extrac>ve’ ins>tu>ons in regions with high popula>on density, and ‘good’ ins>tu>ons in regions with low popula>on density •  Nunn and Puga, 2007 •  Terrain ruggedness in Africa reduces current agricultural output, but may have protected
socie>es from slavers, leading to a net posi>ve effect on current income Reversals of Fortune
  Nega>ve rela>onship between 1500 popula>on density and current income suggests geography does not have strong direct effects.   Problem with ins>tu>onal interpreta>on: •  The places where Europeans set up ‘good ins>tu>ons’ are the same as where
they seNled. Cannot easily dis>nguish between ins>tu>ons and human capital or culture (Glaeser, La Porta, Lopez-­‐de-­‐Silanes and Shleifer, 2004). •  Ins>tu>ons have liNle effect on homogenous ethnic groups divided by a poli>cal borders in Africa (Michalopoulos and Papaioannou, 2010) Population History
  Adjus>ng for ancestry •  BocksteNe, Chanda and PuNerman, 2002; Chanda and PuNerman, 2007 •  Ancestry-­‐Adjusted measures of Agriculture and State experience have more explanatory
power than geographic measures •  Iden>fica>on depends heavily on new-­‐world countries (Most other popula>ons did not migrate much). •  Measures involve some debatable choices •  Ancestors loca>on in 1500 is used because of lack of earlier data •  Not always clear how to define a ‘state’, or how to weight values in the distant past Population History
  Europeans and Development •  BocksteNe, Chanda and PuNerman, 2002; Chanda and PuNerman, 2007 •  The share of European ancestry in a popula>on is correlated with development •  Not en>rely clear what this is measuring (Ins>tu>ons, human capital, educa>on, access to trade,…?) •  Ancestry adjusted agricultural and state history remain significant aRer controlling for share of European ancestry. Population History
  Persistence of Technological Advantage •  Comin, Easterly and Gong, 2010; PuNerman and Weil, 2010 •  Technological adop>on in 1500 CE and 1000 BCE is a significant predictor of income per capita and technology adop>on today •  Ancestral technology use has beNer explanatory power than geographic technology use
  Cultural Differences as barrier to technological diffusion •  Spolaore and Wacziarg (2009) •  Cultural similari>es may aid communica>on and imita>on, allowing technologies to be adopted more easily (with cultural differences leading to the opposite effect) •  Use gene$c distance as a measure of cultural differences Genetic Distance
  ​𝐹↓𝑆𝑇 : A summary measure of differences in allele frequency (different versions of genes with negligible biological effects). Range:
[0,1]   Gene>c distance between separated popula>ons increases linearly with >me   Does not measure direct effects of genes on any outcome •  Comment: It seems to me that gene>c distance would nevertheless be highly
correlated with func>onal gene>c differences…   Gene>c distance is highly correlated with cultural differences, even when controlling for linguis>c and geographic distance* •  Breton, Otruno-­‐Or>n and Weber, 2011 Genetic Distance
*Giuliano, Spilimbergo and Tonon (IZA Discussion Paper, 2006) •  “…the correla>on between gene>c distance and trade is largely spurious and
disappears once geography is properly accounted for.” •  “We conclude that gene>c distance in economics capture transporta>on costs between countries and not cultural differences.” re 1. A. Division of the world’s human popula>on into eight classes of gene>c similarity, based on all difference and similarity at numerous enzyme and blood-­‐group loci. The eight classes represent
arrayed in order of increasing difference. iano, Spilimbergo and Tonon, 2006, adapted from Cavalli Sforza et al., 1994) Genetic Distance
  Addi>onal Measures:
•  ​𝐹𝑆𝑇↓𝑖,𝑗↑𝑊 : Weighted Gene>c Distance •  Weighted average of gene>c distance between countries 𝑖 and 𝑗 given sub-­‐popula>ons of different ancestry •  ​𝐹𝑆𝑇↓𝑖,𝑗↑𝑅 : Rela>ve Gene>c Distance •  Difference between weighted gene>c distance to the US for countries 𝑖 and 𝑗 •  Intended as a measure of the rela>ve distance to the ‘technological fron>er’ •  “Barriers” hypothesis predicts ​𝐹𝑆𝑇↓𝑖,𝑗↑𝑅 should be more significant than ​
𝐹𝑆𝑇↓𝑖,𝑗↑𝑊 in explaining cross country income differences in a gravity equa>on type model A Taxonomy of Transmission
Mechanisms
A Taxonomy of Transmission
Mechanisms
  Biological Transmission •  Combined gene4c and epigene4c transmission •  Inherited directly from parents. Muta>ons occur randomly or in response to environmental condi>ons, expression may also depend on environment.   Cultural Transmission •  Combined behavioral (learning by imita>on) and symbolic transmission (learning through language, wri>ng, etc.) •  Inherited from primarily from parents, but also social networks and ins>tu>ons   Dual Transmission •  Combined Biological and Cultural Transmission (gene-­‐culture coevolu>on) •  Not just the sum, but also the interac4on of the two inheritance mechanisms Dual Transmission Example: Lactose
Tolerance
  10,000 years ago all humans were lactose intolerant as adults (other apes s>ll are).   ~7,500 years ago people (at a small number of independent sites) domes>cated animals and began making cheese and yoghurt (with reduced lactose)   The availability of dairy products created selec>on pressure for lactase persistence (LP). LP allows people to digest raw milk as adults, and probably increases the value of dairy farming.   LP+Dairying spread over northern and western Europe, as well as parts of the middle east and Africa. Most individuals in the rest of the world remain
lactose intolerant.   Unclear how much of the spread is a result of parallel evolu>on vs. migra>on/displacement vs. gene>c mixing. A Taxonomy of Transmission
Mechanisms
  Direct Effects •  Inter-­‐genera>onally transmiNed trait directly affects produc>vity •  Must exhibit high persistence/slow change to link outcomes over thousands of years   Barrier Effects •  Historical differences may create barriers to communica>on, trade, trust, and
technological diffusion •  Differences do not need to have any direct effects. Literature Review
  Biological Transmission, Direct Effects •  Galor and Moav, 2002 •  Selec>on of Quan>ty vs Quality fer>lity strategies as a factor in the demographic transi>on and industrial revolu>on. Posi>ve produc>vity shock may have triggered selec>on of ‘Quality
strategy leading to endogenous transi>on out of Malthusian dynamics. •  Clarke, 2007 •  Biological spread of high-­‐produc>vity traits as an explana>on for the industrial revolu>on. In
England, rich were more fer>le than poor, leading to downward social mobility and spread o
economically successful traits (hard working, etc.). •  Ashraf and Galor, 2010 •  Highly produc>ve socie>es characterized by an ‘op>mal’ amount of gene>c diversity (too much diversity hinders coopera>on, too liNle hinders crea>vity). As humans migrated out of Africa, diversity fell with migra>on distance crea>ng a gradient with a high-­‐produc>vity swee
spot. I don’t like any of these papers! They provide very liBle evidence for specific gene4c mechanisms. Literature Review
  Cultural Transmission, Direct Effects •  Tabellini 2008, 2010; Greif, 1994, 1996; Guiso, Sapienza and Zingales, 2008; Putman,
1993 •  Influence of cultural traits on ins>tu>onal development, persistence, and change (theore>ca
frameworks and empirical tests) •  Grief and Tabellini, 2010 •  Cultural differences explain divergence of China and Europe (kinship-­‐based hierarchy vs non-­‐
kin urban coopera>on) •  Gorodnichenko and Roland, 2011 •  Trade-­‐off between individualism and collec>vism, using gene>c variables as instrument for culture •  Depke and ZiliboI, 2008 •  Altruis>c parents shape children’s preferences, conver>ng Bri>sh middle class into capitalists
aRer industrial revolu>on. Literature Review
  Cultural Transmission, Direct Effects (Con>nued) •  Fernandez and Fogli, 2009; Alesina and Guiliano, 2010 •  Examine intergenera>onally transmiNed traits (fer>lity behavior, economic outcomes) using second-­‐genera>on immigrants •  Alesino, Guiliano and Nunn (2011) •  Ancestral use of plough associated with lower female workforce par>cipa>on •  Bisin and Verdier, 2000,2001 •  Introduce parental decisions into transmission mechanism. Parents are altruis>c, but limited by their own cultural perspec>ve (“imperfect empathy”). Gives different evolu>onary predic>ons, par>cularly regarding cultural assimila>on and persistence of cultural differences. •  Francois, 2002; Francois and Zabojnik, 2005; Algan and Cahuc, 2010 •  Transmission of “trustworthiness”, and the effect on economic growth Literature Review
  Dual Transmission, Direct Effects •  Boyd, Gin>s, Bowles and Richardson, 2003; Gin>s, Bowles, Boyd and Fehr, 2003; Bowles and Gin>s, 2011 •  Gene-­‐culture interac>ons and the evolu>on of altruis>c behavior •  Group selec>on as driving force for coopera>on •  Social emo>ons (shame, guilt) as complementary biological component Literature Review
  Barrier Effects (Any transmission) •  Guiso, Sapienza and Zingales, 2009; Felbermayr and Toubal, 2010 •  Barriers to trade from cultural differences (measured by soma>c distance*, vo>ng paNerns in Eurovision Song Contest) *Soma>c distance is based on visible traits, in this case height, shape of skull, and hair colour •  Belloc and Bowles, 2010 •  Interac>ons between trade and cultural diversity maintain cultural differences and barriers to trade, but also promote specializa>on and compara>ve advantage. •  Spolaore and Wacziarg, 2009, 2011 •  Cultural differences as barriers to technology diffusion