You Didn’t Build That

There is a widely held belief in Western society that culture, institutions, and history determine which countries become wealthy and which do not. In a certain sense this belief is accurate: rule of law is clearly superior to anarchy, hard work and generosity are superior to laziness and selfishness, a peaceful history is superior to a war-torn one, and so forth. However, this argument still leaves a crucial question unanswered: what influences the molding of culture, institutions, and history in the first place?

Part of the answer to this question must obviously be geography, the existence of which, unlike culture, predates humanity. However, mainstream opinion tends to be resistant to this view. While it accepts that the forces of geography are powerful, it does not agree that geography deserves most of the responsibility for determining the economic winners and losers of the present age.

A recent illustration of this is “Why Nations Fail: The Origins of Power, Prosperity and Poverty”, a highly acclaimed book coauthored by MIT economist Darren Acemoglu and Harvard professor James Robinson in 2012. The book argues, among other things, that geography-oriented approaches to economics are for the most part incorrect, as according to the authors such approaches fail to explain why North Korea is so much poorer than neighbouring South Korea, Zimbabwe is so much poorer than neighbouring Botswana, Haiti is so much poorer than neighbouring Dominican Republic, and northern Mexico is so much poorer than neighbouring American states like Arizona and New Mexico. They claim instead that it is the “inclusivity” of a country’s institutions that determines more than anything else its economic fate.

Is mainstream opinion correct on this matter? Or does it persist, perhaps, in part because its abandonment in favour of a more geographical view of economic development would seem to mean accepting a world where the fate of our lives and our countries has not been in our own hands, and where we in the West could no longer pat ourselves and our forefathers on the back for achieving our current level of prosperity and freedom relative to other societies?

Here’s the truth of it: geography has been by far the dominant force in determining which countries achieve wealth and which do not. If you don’t believe this, take a look at the following statistics:

The third largest economy in the world, Japan, has by some measures the world’s longest coastline if you exclude Arctic and tropical regions. The United States, the world’s largest economy, has the second longest coastline if you exclude Arctic and tropical regions. China, the world’s second largest economy, has the third longest. Britain, the world’s sixth largest economy, has the fifth longest. Italy, the world’s seventh largest economy, has the sixth longest.

The United States has by far the world’s largest system of interior waterways outside of the Arctic and the Tropics. China has the second largest. Germany, the world’s fourth largest economy, has the fifth largest. France, the world’s fifth largest economy, has the fourth largest. India, the world’s eighth largest economy, has the sixth largest.

Roughly three-quarters of Africa’s landmass is located between the Tropics of Cancer and Capricorn, between which lies the equator. Six of Africa’s eight largest economies, however – South Africa, Egypt, Algeria, Morocco, Tunisia, and Libya – are located outside of the Tropics.  10 out of the 17 largest countries in East Asia are located either entirely or almost entirely within the Tropics. East Asia’s four largest economies, however – China, Japan, Australia, and South Korea – are located either north or south of the Tropics. Almost two-thirds of South America is located within the Tropics. South America’s second and third largest economies, however –  Argentina and Chile –  are located outside of the Tropics, while about 60 percent of the wealth of its largest economy, Brazil, which is generated in the 10 percent or so of Brazilian territory that is located outside or almost outside of the Tropics.

In China, more than half of all economic output is generated within the 10 percent or so of the country’s territory that is situated within 400 km of the sea. In Brazil, nearly two-thirds of all economic output is generated within the 20 percent or so of the country’s territory that is situated within 300 km of the sea. In Australia, more than 90 percent of all economic output is generated within the 15 percent or so of the country’s territory that is situated within 200 km of the sea. Similar patterns appear to various extents in most countries.

Deserts and mountains are not generally conducive to economic growth. The only mountainous country that  has a large economy and a high standard of living is Switzerland, which benefits from being located in between Germany, France, Italy, and Austria, while simultaneously having had its mountains insulate it from the devastating wars that wracked Europe throughout its history. The only wealthy desert countries that have high standards of living are those, like Kuwait, Qatar, or the United Arab Emirates, that also possess huge deposits of easily-accessible oil or natural gas.

Of course, there are cases where geography cannot easily be employed to explain economic disparities between two areas. When viewed in the context of the statistics listed above, however, these instances appear to be too small and anomalous to serve as a meaningful rebuke of geography’s influence. Indeed, some of the places most commonly listed as examples of geography’s limitations are arguably misunderstood by the people who claim them as such.

Take Korea, for instance. The hugely divergent standard of living between its dictatorial North and democratic South is one of the most striking and most widely cited cases of a place where geography does not seem to be able to offer an explanation for economic outcomes. Upon closer inspection, however, this may not be entirely the case.

After all, it was the North`s strategic geography, sharing a 1400 km long border with China and occupying a position alongside the narrow entrance to the Bohai Sea that most of northern China (including Beijing) is dependent upon in order to access the Pacific Ocean, which prompted the Chinese to sacrifice many hundreds of thousands of their citizens in order to push the American and South Korean armies southward during the Korean War of the 1950`s. In doing so, the Chinese ensured the continued existence of the North’s isolationist regime, which they have supported ever since in order to prevent a united Korea from forming. Thus, while the totalitarianism of the Kim family is undoubtedly the proximate cause of North Korea’s problems, geography in a certain sense is its root cause.

Indeed, the reluctance of East Asia’s other great power, Japan, to push for Korean unification may also have a bit to do with geography. Korea is only 200 km away from Japan, which is much  closer than Japan is to any other part of mainland Asia. This proximity historically allowed an intense animosity between the two countries, which in recent decades has arguably made the Japanese wary of the prospect of a reunified Korea that could potentially ally itself with other powers like the Americans or Chinese. The Koreans often resent the Japanese much more than they do the Chinese. Meanwhile, even the Russians may have an ongoing geopolitical interest in Korean weakness and fragmentation, since the Korean border is only about 100 km from Vladivostok, which is the only significant port city in all of mainland Pacific Russia.

Finally, it is perhaps worth mentioning that South Korea was itself a pretty harsh dictatorship well into its modern economic emergence; it used to have much more in common with North Korea than it does today.  Also, North Korea is, unlike South Korea, an extremely mountainous country, and extremely mountainous countries tend to be quite poor.

Geography and the United States 

One reason that geography is often underestimated as a driver of economic development is that once a geographically-lucky country becomes rich, it can afford to build infrastructure that can, to a certain extent, free it from its dependence on that same geography. The modern United States, for example, could afford to ignore conventional geographical forces when choosing to develop its desert cities like Las Vegas, Phoenix, or even Las Angeles (though of course, these cities exist for a different geographic reason: they are sunny and warm). More generally, the US today has such extensive road, railway, pipeline, and air travel networks that its river and coastal waterway networks are no longer so significant. As of 2011, the US transported more than twice the tonnage of goods by rail than it did by water, and almost 15 times more tonnage of goods by truck than by water.

If, however, you were to wind back the clock by 100 or 200 years, the map of leading US cities would seem to be highly determined by geography. New York City has been the largest city in the US for most of the country’s history. It is optimally situated from a geo-ecomomic perspective, with a very long and sheltered coastline (Manhattan and Long Island are both narrow islands, after all, while Jersey City and the Bronx are both long narrow peninsulas and Staten Island is, of course, also an island),  direct access to the Great Lakes-St Lawrence River network by way of the Hudson River (access which all other Northeastern US cities lack; see map below), and a position directly in the centre of the Boston-to-Washington D.C. region.

The Boston-to-Washington D.C. region has a temperate, coastal climate as well as  proximity to the Northern Atlantic – in contrast to the Carolinas, Georgia, or Florida, where the climate is often subtropical and the coast is both further south and further west. Boston-to-Washington D.C. is also where one of the world’s densest concentration of commercially-suited natural harbours and inlets are located. The largest of these, Chesapeake Bay, is where the twin cities of Washington and Baltimore are situated. Washington is located off the bay, however, up the Potomac River, for security reasons. Yet this did not prevent the British from setting most of it on fire, including the White House and the Capitol,  during the War of 1812.

The US’s second largest city between the 1890s and 1990s was Chicago, which is where the gigantic Greater Mississippi river basin comes closest to joining with the equally significant Great Lakes-St Lawrence River basin. Chicago is also due west of New York City, and just 400 km north of St Louis, the place where the Mississippi and Missouri Rivers converge and then meet with the Ohio River just 200 km to the south (see map below). St Louis was the US’s fourth largest city between the 1890s and 1920s, and was the US’s largest city outside of the Boston-to-Washington D.C region or Chicago from the 1870s until the 1920’s.

In the 1840s, the US’s largest city apart from New York City was New Orleans, which is located at the exact point where the Mississippi River meets the Atlantic Ocean. New Orleans was also the US’s largest city outside of the Boston-to-Washington D.C. area from the 1820s until the 1870s. In fact, from the 1840s until the 1870s New Orleans was 2-4 times more populous than any other city in the entire southern half of the US. While today New Orleans is estimated to be just the US’s 50th largest city, it remains far and away the country’s largest port by tonnage handled, and is only 500 km from Houston, which has become the US’s fourth most populous city and second largest port by tonnage handled.

After overtaking the South Carolinian city of Charleston in the 1810s, New Orleans was not surpassed in population by any US city south of St Louis until the 1880s, when it was overtaken by San Francisco. Though today San Francisco may be much smaller than Las Angeles (though the Bay Area as a whole remains the 5th  largest urban area in the US),  as recently as 1890 it had a population six times larger than that of Las Angeles. San Francisco was blessed by geography, not only possessing the extremely large and sheltered San Francisco Bay, but also a location in the only spot where the Pacific Ocean directly abuts the Central Valley of California. It is also located around the midpoint of that valley’s length.

Ironically, even as conventional wisdom has falsely proclaimed that geography is not as important as culture, this view may soon become true. Technology will continue to reduce the conventional influence of geography, and may therefore put the fate of the world more firmly into human hands (in a certain sense, at least). Even just in the next decade, it is plausible that there will be billions of new Internet users, hundreds of millions of new city-dwellers, and tens of millions of new millionaires. The future seems increasingly likely to be one in which we finally become free of geography’s mindless determinism. But for now we are not.