Economic growth and economic development 182

Introduction to Modern Economic Growth checks on the behavior of politicians and leaders, the identity of leaders seems to play almost no role in economic performance Given these considerations, we conclude that models emphasizing luck and multiple equilibria are useful for our study of the mechanics of economic development, but they are unlikely to provide us with the fundamental causes of why world economic growth started 200 years ago and why some countries are rich while others are poor toady 4.3.2 Geography While the approaches in the last subsection emphasize the importance of luck and multiple equilibria among otherwise-identical societies, an alternative is to emphasize the deep heterogeneity across societies The geography hypothesis is, first and foremost, about the fact that not all areas of the world are created equal “Nature”, that is, the physical, ecological and geographical environment of nations, plays a major role in their economic experiences As pointed out above, geographic factors can play this role by determining both the preferences and the opportunity set of individual economic agents in different societies There are at least three main versions of the geography hypothesis, each emphasizing a different mechanism for how geography affects prosperity The first and earliest version of the geography hypothesis goes back to Montesquieu ([1748], 1989) Montesquieu, who was a brilliant French philosopher and an avid supporter of Republican forms of government, was also convinced that climate was among the main determinants of the fate of nations He believed that climate, in particular heat, shaped human attitudes and effort, and via this channel, affected both economic and social outcomes He wrote in his classic book The Spirit of the Laws: “The heat of the climate can be so excessive that the body there will be absolutely without strength So, prostration will pass even to the spirit; no curiosity, no noble enterprise, no generous sentiment; inclinations will all be passive there; laziness there will be happiness,” “People are more vigorous in cold climates The inhabitants of warm countries are, like old men, timorous; the people in cold countries are, like young men, brave ” 168