Introduction to Modern Economic Growth CAN AUS 10 USA SGP HKG Log GDP per capita, PPP, in 1995 NZL CHL ARG URY BWA BRA VEN ZAF GAB MEX MYS KNA PAN COL TTO CRI NAM SUR GUY PRY SWZ CPV BOL ZWE LSO BHS BRB LCA ECU GRD PER BLZ DOM DMA VCT GTM PHL SLV AGO HND NIC CMR COG DZA JAM IDN MAR EGY LKA GIN CIV MRTGHA SEN COM GMB TGOVNM CAF HTILAO BEN KEN UGA ZAR BFA TCD MDG NGA ZMB NER ERI MLI MWI MOZ TZA TUN IND SDN PAK NPL BGD BDI RWA SLE -5 Log Population Density in 1500 Figure 4.6 Reversal of Fortune: population density in 1500 versus income per capita in 1995 them on the former European colonies the late eighteenth and early nineteenth centuries Moreover, a wealth of qualitative and quantitative evidence suggests that this went hand in hand with industrialization (see, for example, Acemoglu, Johnson and Robinson, 2002) Figure 4.8 shows average urbanization in colonies with relatively low and high urbanization in 1500 The initially high-urbanization countries have higher levels of urbanization and prosperity until around 1800 At that time the initially low-urbanization countries start to grow much more rapidly and a prolonged period of divergence begins These patterns are clearly inconsistent with simple geography based views of relative prosperity In 1500 it was the countries in the tropics which were relatively prosperous, today it is the reverse This makes it implausible to base a theory of relative prosperity on the intrinsic poverty of the tropics, climate, disease environments or other fixed characteristics Nevertheless, following Diamond (1997), one could propose what Acemoglu, Johnson and Robinson (2002a) call a “sophisticated geography hypothesis,” which claims that geography matters but in a time varying way For example, Europeans 187