How the World Became Rich. Mark Koyama
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Geographic features such as access to rivers and coasts and high-quality agricultural land also help explain many patterns of comparative development prior to industrialization.
But this does not mean that geography can provide a full answer for the puzzle of comparative economic development. Before 1800, better-endowed lands were not much richer in per capita terms than were less well-endowed lands. They just tended to be more densely populated. Moreover, while geographic characteristics can explain much of the variation in the location of economic activity, they do not provide the full story. Firms benefit from being near each other. So do workers. Economies of scale and the network effects associated with close proximity (known in economics as agglomeration effects), rather than geographic fundamentals, often explain why certain cities outperform others. Most importantly, geography on its own cannot account for the timing of the Industrial Revolution, the onset of modern, sustained economic growth in the 19th century, or the various reversals of fortune that we observe in the historical record.
Where does this leave us? Is there a role for geography in explaining why the world became rich? Hopefully, this chapter has convinced you that geography has played an important role in determining certain outcomes that differ between societies, but that it cannot explain everything. If it could explain everything, our fate would have been written thousands of years ago with little room for human agency. In the remaining chapters, we will show that human actions have played a significant role in determining the economic trajectories of societies. These decisions range from the most intimate (how many babies to have) to the type of legal and political systems societies have. Yet, even though human actions have played a key role in determining the world’s economic distribution, geography likely played some role in these decisions. To some degree, geography has helped shape societies’ institutions (the subject of Chapter 3), culture (the subject of Chapter 4), demography (the subject of Chapter 5), and colonization (the subject of Chapter 6). We will keep these interactions in mind as we proceed through the first half of the book.
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