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Introduction to Modern Economic Growth in the book) For example, multiple equilibria can exist in technology adoption, in models that focus on human capital or physical capital investments Therefore, explanations based on luck or multiple equilibria are theoretically well grounded in the types of models we will study in this book Whether they are empirically plausible is another matter By geography, we refer to all factors that are imposed on individuals as part of the physical, geographic and ecological environment in which they live Geography can affect economic growth through a variety of proximate causes Geographic factors that can influence the growth process include soil quality, which can affect agricultural productivity; natural resources, which directly contribute to the wealth of a nation and may facilitate industrialization by providing certain key resources, such as coal and iron ore during critical times; climate, which may affect productivity and attitudes directly; topography, which can affect the costs of transportation and communication; and disease environment, which can affect individual health, productivity and incentives to accumulate physical and human capital For example, in terms of the aggregate production function of the Solow model, poor soil quality, lack of natural resources or an inhospitable climate or topography may correspond to a low level of A, that is, to a type of “inefficient technology” As we will see below, many philosophers and social scientists have suggested that climate also affects preferences in a fundamental way, so perhaps those in certain climates have a preference for earlier rather than later consumption, thus reducing their saving rates both in physical and human capital Finally, differences in the disease burden across areas may affect the productivity of individuals and their willingness to accumulate human capital Thus geography-based explanations can easily be incorporated into both the simple Solow model we have already studied and the more satisfactory models we will see later in the book By institutions, we refer to rules, regulations, laws and policies that affect economic incentives and thus the incentives to invest in technology, physical capital and human capital It is a truism of economic analysis that individuals will only take actions that are rewarded Institutions, which shape these rewards, must therefore be important in affecting all three of the proximate causes of economic growth we have seen so far What distinguishes institutions from geography and luck is that 158