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Geography and economic destiny

Real estate agents are fond of saying that the three most important things to look for in buying a house are location, location and location.

Geography matters a great deal, and not just in real estate. A growing number of economists and historians are using the tools of this venerable academic discipline to plumb the mysteries of why some nations achieve great economic success, giving their citizens high standards of living, and why others do not. They contend that conventional analyses based exclusively on socioeconomic factors only reveal part of the story.

Among the proponents of giving geography its due are John Luke Gallup and Jeffrey D. Sachs of Harvard's Institute for International Development. A paper they prepared on the subject "Geography and Economic Development," was presented by Gallup at a recent seminar at the IDB's Washington, D.C., headquarters.

In their analysis, Gallup and Sachs identify a number of geographic factors that constrain a country's efforts to achieve economic success. They include:

- A tropical location, with its greater burden of disease and reduced agricultural productivity;

- Lack of access to the coast or to navigable waterways, increasing costs of transporting products to market and standing in the way of the migration of labor to areas of greater economic opportunity;

- High population density, a negative factor in interior areas although not necessarily so in coastal regions.

In the light of these factors, it is no surprise that the coastal, temperate Northern Hemisphere countries--Western Europe, Northeast Asia, the eastern and western seaboards of the U.S. and Canada--are home to the world's largest financial and productive centers.

Although geography has a strong influence on a society's economic fate, Gallup and Sachs stress that other factors, such as economic policy and quality of institutions, must also be taken into account.

They cite the example of North Korea, a geographically favored country whose economy has suffered under misguided policies.

An understanding of geographical realities could persuade policymakers to rethink some development assistance priorities, say the authors. For example, they could give higher priority to solving the transport needs of landlocked countries, a move that would often require the cooperation of neighboring countries. They also could pay more attention to the likelihood and desirability of future large-scale migrations from geographically unfavored regions.

Population must be another major part of the policy equation. Gallup and Sachs note that future population increases are likely to be largest precisely in countries that are most geographically and economically disadvantaged, and where such increases may further depress per capita income.

Finally, the study suggests that economic policies, as well as foreign aid, should take into account a country's geographical strengths and weaknesses. More resources should be directed to removing constraints to agricultural production and improving health. At present, research on tropical agriculture is seriously underfunded, according to the study, and tropical health problems are receiving even less attention.

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