How the World Became Rich. Mark Koyama
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an important determinant of market size today (Redding and Venables, 2004). It mattered even more in the pre-industrial period. Prior to the spread of the railroad in the mid-19th century, water transport was by far the most cost-effective way to transport goods from one place to another. It was often twenty times cheaper to transport a good by sea than by land. So, it is reasonable to suspect that access to navigable waterways was historically an important component of economic growth.
Venice and the Low Countries provide instructive examples. Both were among the centers of commerce in late medieval Europe. Neither were ideal places to set up cities. Both were established on marshlands that required heroic feats of hydraulic engineering just to be viable (and, for this reason, both are in danger if sea levels rise too much in the 21st century). Why did people not only inhabit these regions but thrive while doing so? Access to water is one clear answer. The Low Countries have numerous ports that spilled out into the lucrative North Sea trade. Venice is on the Adriatic Sea, giving it prime access to the Mediterranean. But access to water is likely not the only reason people settled there. Montesquieu speculated that trade first developed in marginal lands where the land was unproductive and where individuals only settled because they were fleeing violence and predation. Indeed, it is these factors that are often emphasized in tales of the founding of Venice.
Another important geographic factor is ruggedness – how mountainous a particular territory is. Rugged terrain impedes trade and communication. This barrier was especially severe in pre-industrial times prior to the invention of the automobile, steam engine, and airplane. Japan, for example, is highly mountainous. Only a tiny fraction of the Japanese islands are suitable for rice cultivation or are possible locations for cities. Mountain ranges form a spine running through the country. This very well may have held Japan back. Yet, as we discussed in Chapter 1, although rugged terrain is usually seen as a major impediment to economic development, Nunn and Puga (2012) highlight the blessing of bad geography in sub-Saharan Africa. Historically, rugged territories were less likely to suffer the predation of slavers. Hence areas with “bad” geography in sub-Saharan Africa are richer rather than poorer today.
The quotes cited at the beginning of the chapter from Abū al-Qāsim Sā’id and Montesquieu argued that one reason why geography mattered was climate. Climate, unlike other geographic characteristics, is not fixed, however. For example, the climate of the Mediterranean was both warmer and wetter around 0 CE. Solar activity was high and stable. Evidence from tree rings and ice cores suggests that the 1st century CE was warmer than even the last century and a half (since 1850) (Manning, 2013). Consequently, the land available for agriculture expanded. Ancient historians like Harper (2017) link this Roman Climatic Optimum to the rise of the Roman Empire.
Wheat agriculture is highly sensitive to temperature. Warm growing-season temperatures are especially critical. The downside to higher temperatures is aridity and the risk of drought. The Roman warm period, however, was also wetter. This environment made it possible for Romans to expand the cultivation of Mediterranean crops inland into mountainous terrain. According to Harper (2017, p. 53) this warmth “was the enabling background of the Roman miracle…. If we only count the marginal land rendered susceptible to arable farming in Italy by higher temperatures, on the most conservative estimates, it could account for more than all of the growth achieved between Augustus and Marcus Aurelius” (that is, between c. 0 and c. 150 CE).
The passing of the Roman Climatic Optimum was associated with political crises. Periods of lower rainfall, especially in the 3rd century CE, were associated with military mutinies and imperial assassinations (Christian and Elbourne, 2018). Similarly, colder and more volatile weather together with the spread of epidemic disease helped to account for the failed attempts to rebuild the Roman Empire. Volcanic eruptions possibly led to what is known as the “Year without Sun” (536 CE). The century that followed has been called the Late Antique Little Ice Age. Although historians no longer use the term “the Dark Ages” to describe the early Middle Ages, the phrase does capture something vivid about how possibilities narrowed after 550 CE (Ward-Perkins, 2005).
Climatic change also played a role in the revival of the European economy after 1000. Cultivated land expanded. Vineyards proliferated in England. Iceland and Greenland were settled by Vikings. In Chapter 3, we discuss the period of economic expansion – known as the Commercial Revolution – that occurred between 1000 and 1300, during a period of unusually warm weather (Lamb, 1982). Institutional innovations were critical. But the climate was an important enabling condition. Similarly, populations and cities expanded in Southeast Asia and in North America in this period before collapsing in the late 13th and 14th centuries (Richter 2011, pp. 11—36; Reid 2015, pp. 50–6).
In the late 13th century, the climate began to become more unstable and cooler. The 15th century was especially cold due to low levels of solar activity. Although there were warmer conditions in the 16th century, the climate worsened again in the 17th century. Consequently, the entire period is often labeled the Little Ice Age. Figure 2.5 plots estimates of temperature deviations from 1100 to 1800. The Little Ice Age was both colder and more volatile.
Figure 2.5 Temperature deviations across Europe, 1100–1800
Data source: Anderson, Johnson, and Koyama (2017).
The downturn in the climate that occurred in the late Middle Ages had real economic consequences. For one, it impacted city growth rates (Waldinger, 2019). Worsening climatic conditions generated political instability across Eurasia (Parker, 2014). The climate downturn also made minority communities like Jews more vulnerable to persecution. As entrenched antisemitic attitudes were common across Europe, Jews were frequently scapegoated for economic ills and political crises. Unusually cold weather increased the probability that a city would persecute its Jewish community by as much as 50% (Anderson, Johnson, and Koyama, 2017).
Colder weather associated with the Little Ice Age affected war and conflict more generally. Using geo-coded battle locations, Iyigun, Nunn, and Qian (2017) find that colder weather was associated with more conflict between 1400 and 1900. These effects were stronger in areas with worse-quality soil and regions that were already cold in 1400. Nevertheless, despite colder weather, it was in these centuries that the seeds of modern economic growth were sown. This raises the question: how can geographic and climatic constraints be overcome?
Geography and Transport Infrastructure
Can investment in transport infrastructure overcome the curse of geography? It seems possible. The Trans-Siberian Railway brought harsh terrain in contact with markets and goods to a degree previously unimaginable. But can transport infrastructure fully overcome the curse of bad geography or just ameliorate it?
Infrastructure projects can be financed by private individuals or by the state. But why do some institutional arrangements facilitate private investment in infrastructure while others deter it? Why do some states invest and others do not? When are states even capable of undertaking such projects in the first place? These questions suggest that overcoming “bad” geography may require institutions capable of diverting resources to infrastructure. Although we will return to this issue in Chapter 7, we outline here some of the ways that investments in transport infrastructure affected historical economic development.
The Roman Empire invested in a road system. By the reign of the Emperor Trajan (r. 97–117 CE), the road network comprised 80,000 km (see Figure 2.6). It was complemented by massive inland waterways that crisscrossed the empire and connected landlocked cities with the Roman lake that was the Mediterranean Sea. The Roman road system was built for military reasons. But once established, it played a crucial role in knitting the empire together economically and culturally. The suppression of Mediterranean