jeffery sachsthe geography of poverty and wealth

8/4/2019 Jeffery SachsThe Geography of Poverty and Wealth

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Copyright 2001 Scientific American, Inc.


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Why are some countries stu-pendously rich and othershorrendously poor? So-cial theorists have been captivated bythis question since the late 18th century,when Scottish economist Adam Smithaddressed the issue in his magisterialwork The Wealth of Nations. Smith ar-

gued that the best prescription for pros-perity is a free-market economy in whichthe government allows businesses sub-stantial freedom to pursue profits. Overthe past two centuries, Smiths hypothe-sis has been vindicated by the strikingsuccess of capitalist economies in NorthAmerica, western Europe and East Asiaand by the dismal failure of socialistplanning in eastern Europe and the for-mer Soviet Union.

Smith, however, made a second no-table hypothesis: that the physical geog-raphy of a region can influence its eco-nomic performance. He contended thatthe economies of coastal regions, withtheir easy access to sea trade, usually out-perform the economies of inland areas.Although most economists today followSmith in linking prosperity with freemarkets, they have tended to neglect therole of geography. They implicitly as-sume that all parts of the world have thesame prospects for economic growthand long-term development and thatdifferences in performance are the resultof differences in institutions. Our find-

ings, based on newly available data and

research methods, suggest otherwise.We have found strong evidence that ge-ography plays an important role in shap-ing the distribution of world income andeconomic growth.

Coastal regions and those near navi-gable waterways are indeed far richerand more densely settled than interior

regions, just as Smith predicted. More-over, an areas climate can also affect itseconomic development. Nations in trop-ical climate zones generally face higherrates of infectious disease and loweragricultural productivity (especially forstaple foods) than do nations in temper-ate zones. Similar burdens apply to thedesert zones. The very poorest regions inthe world are those saddled with bothhandicaps: distance from sea trade and atropical or desert ecology.

A skeptical reader with a basic un-derstanding of geography might com-ment at this point, Fine, but isnt all ofthis familiar? We have three respons-es. First, we go far beyond the basics bysystematically quantifying the contribu-tions of geography, economic policyand other factors in determining a na-tions performance. We have combinedthe research tools used by geograph-ersincluding new software that cancreate detailed maps of global popula-tion densitywith the techniques andequations of macroeconomics. Second,the basic lessons of geography are worth

repeating, because most economists have

ignored them. In the past decade the vastmajority of papers on economic devel-opment have neglected even the mostobvious geographical realities. Third, ifour findings are true, the policy impli-cations are significant. Aid programsfor developing countries will have to berevamped to specifically address the

problems imposed by geography. Inparticular, we have tried to formulatenew strategies that would help nationsin tropical zones raise their agriculturalproductivity and reduce the prevalenceof diseases such as malaria.

The Geographical Divide

The best single indicator of prosperi-ty is gross national product (GNP)per capitathe total value of a coun-trys economic output, divided by itspopulation. A map showing the worlddistribution of GNP per capita immedi-ately reveals the vast gap between richand poor nations [see map on page 74].Notice that the great majority of thepoorest countries lie in the geographicaltropicsthe area between the tropic ofCancer and the tropic of Capricorn. Incontrast, most of the richest countries liein the temperate zones.

A more precise picture of this geo-graphical divide can be obtained bydefining tropical regions by climaterather than by latitude. The map on

page 75 divides the world into five



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broad climate zones based on a classifi-cation scheme developed by German cli-matologists Wladimir P. Kppen andRudolph Geiger. The five zones are trop-ical-subtropical (hereafter referred to as

tropical), desert-steppe (desert), temper-ate-snow (temperate), highland and po-lar. The zones are defined by measure-ments of temperature and precipitation.We excluded the polar zone from ouranalysis because it is largely uninhabited.

Among the 28 economies categorizedas high income by the World Bank (withpopulations of at least one million),only Hong Kong, Singapore and part ofTaiwan are in the tropical zone, repre-senting a mere 2 percent of the combinedpopulation of the high-income regions.

Almost all the temperate-zone countrieshave either high-income economies (asin the cases of North America, westernEurope, Korea and Japan) or middle-income economies burdened by social-ist policies in the past (as in the cases ofeastern Europe, the former Soviet Unionand China). In addition, there is astrong temperate-tropical divide withincountries that straddle both types of cli-mates. Most of Brazil, for example, lieswithin the tropical zone, but the richestpart of the nationthe southernmost

statesis in the temperate zone.

The importance of access to sea tradeis also evident in the world map of GNPper capita. Regions far from the sea,such as the landlocked countries ofSouth America, Africa and Asia, tend tobe considerably poorer than their coastalcounterparts. The differences betweencoastal and interior areas show up evenmore strongly in a world map delineat-ing GNP densitythat is, the amount ofeconomic output per square kilometer[see illustration on pages 70 and 71].

This map is based on a detailed surveyof global population densities in 1994.Geographic information system soft-ware is used to divide the worlds landarea into five-minute-by-five-minute sec-tions (about 100 square kilometers atthe equator). One can estimate the GNPdensity for each section by multiplyingits population density and its GNP percapita. Researchers must use nationalaverages of GNP per capita when re-gional estimates are not available.

To make sense of the data, we have

classified the worlds regions in broadcategories defined by climate and prox-imity to the sea. We call a region nearif it lies within 100 kilometers of a sea-coast or a sea-navigable waterway (a riv-er, lake or canal in which oceangoingvessels can operate) and far otherwise.Regions in each of the four climate zoneswe analyzed can be either near or far, re-sulting in a total of eight categories. Thetable on the next page shows how theworlds population, income and landarea are divided among these regions.

The breakdown reveals some striking

patterns. Global production is highlyconcentrated in the coastal regions oftemperate climate zones. Regions in thetemperate-near category constitute amere 8.4 percent of the worlds inhabitedland area, but they hold 22.8 percent ofthe worlds population and produce 52.9percent of the worlds GNP. Per capitaincome in these regions is 2.3 timesgreater than the global average, andpopulation density is 2.7 times greater.In contrast, the tropical-far category is

the poorest, with a per capita GNP onlyabout one third of the world average.

Interpreting the Patterns

In our research we have examined threemajor ways in which geography af-fects economic development. First, asAdam Smith noted, economies differ intheir ease of transporting goods, peopleand ideas. Because sea trade is less cost-ly than land- or air-based trade, econo-mies near coastlines have a great advan-

tage over hinterland economies. Theper-kilometer costs of overland tradewithin Africa, for example, are often anorder of magnitude greater than thecosts of sea trade to an African port.Here are some figures we found recent-ly: The cost of shipping a six-meter-longcontainer from Rotterdam, the Nether-lands, to Dar-es-Salaam, Tanzaniaanair distance of 7,300 kilometerswasabout $1,400. But transporting thesame container overland from Dar-es-Salaam to Kigali, Rwandaa distance

of 1,280 kilometers by roadcost

www.sciam.com Scientific American March 2001 73

ECONOMIC DISPARITIES can be partly attrib-

uted to geography.Coastal temperate-zone

countries such as Germany (opposite page)

have lower transportation costs and higher

farm productivity than landlocked tropical-

zone countries such as Uganda (above).



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about $2,500, or nearly twice as much.Second, geography affects the preva-

lence of disease. Many kinds of infec-tious diseases are endemic to the tropi-cal and subtropical zones. This tends tobe true of diseases in which the patho-gen spends part of its life cycle outsidethe human host: for instance, malaria(carried by mosquitoes) and helminthicinfections (caused by parasitic worms).Although epidemics of malaria have oc-curred sporadically as far north asBoston in the past century, the diseasehas never gained a lasting foothold inthe temperate zones, because the coldwinters naturally control the mosquito-based transmission of the disease. (Win-

ter could be considered the worlds mosteffective public health intervention.) It ismuch more difficult to control malariain tropical regions, where transmissiontakes place year-round and affects alarge part of the population.

According to the World Health Orga-nization, 300 million to 500 million newcases of malaria occur every year, almostentirely concentrated in the tropics. Thedisease is so common in these areas thatno one really knows how many people itkills annuallyat least one million and

perhaps as many as 2.3 million. Wide-spread illness and early deaths obviouslyhold back a nations economic perform-ance by significantly reducing workerproductivity. But there are also long-term effects that may be amplified overtime through various social feedbacks.

For example, a high incidence of dis-ease can alter the age structure of a coun-trys population. Societies with high lev-els of child mortality tend to have highlevels of fertility: mothers bear many chil-dren to guarantee that at least some will

survive to adulthood. Young children

will therefore constitute a large propor-tion of that countrys population. Withso many children, poor families cannotinvest much in each childs education.High fertility also constrains the role ofwomen in society, because child rearingtakes up so much of their adult lives.

Third, geography affects agriculturalproductivity. Of the major food grainswheat, maize and ricewheat growsonly in temperate climates, and maizeand rice crops are generally more pro-ductive in temperate and subtropical cli-mates than in tropical zones. On aver-age, a hectare of land in the tropicsyields 2.3 metric tons of maize, whereasa hectare in the temperate zone yields

6.4 tons. Farming in tropical rain-forestenvironments is hampered by the fragili-ty of the soil: high temperatures mineral-ize the organic materials, and the intenserainfall leaches them out of the soil. Intropical environments that have wet and

dry seasonssuch as the African savan-nafarmers must contend with the rap-id loss of soil moisture resulting fromhigh temperatures, the great variabilityof precipitation, and the ever presentrisk of drought. Moreover, tropical envi-ronments are plagued with diverse infes-tations of pests and parasites that candevastate both crops and livestock.

Many of the efforts to improve foodoutput in tropical regionsattemptedfirst by the colonial powers and then inrecent decades by donor agencieshaveended in failure. Typically the agricultur-al experts blithely tried to transfer tem-perate-zone farming practices to the trop-ics, only to watch livestock and crops

succumb to pests, disease and climatebarriers. What makes the problem evenmore complex is that food productivityin tropical regions is also influenced bygeologic and topographic conditions thatvary greatly from place to place. The is-land of Java, for example, can supporthighly productive farms because the vol-canic soil there suffers less nutrient de-pletion than the nonvolcanic soil of theneighboring islands of Indonesia.

Moderate advantages or disadvan-tages in geography can lead to big dif-

ferences in long-term economic per-formance. For example, favorable agri-cultural or health conditions may boostper capita income in temperate-zone na-tions and hence increase the size of theireconomies. This growth encourages in-ventors in those nations to create prod-ucts and services to sell into the largerand richer markets. The resulting inven-tions further raise economic output,spurring yet more inventive activity. Themoderate geographical advantage isthus amplified through innovation.

In contrast, the low food output per

74 Scientific American March 2001 The Geography of Poverty and Wealth

Data for 1995

$465 $1,999

$2,000 $4,999

$5,000 $9,999

$10,000 $15,999

$16,000 $44,000

No data

Tropic of Cancer

Tropic of Capricorn

GNP per Capita

WEALTH AND CLIMATE are

inextricably linked.By com-

paring world maps show-

ing GNP per capita (right)

and climate zones (opposite

page),one notices that tem-

perate-zone countries aregenerally much more pros-

perous than tropical-zone

nations.And in each climate

zone, the regions near sea-

coasts and waterways are

richer than the hinterlands

(table below).

The Wealth of RegionsClimate Zone (percent of world total) Near* Far*

Tropical

Land area 19.9% 5.5% 14.4%

Population 40.3% 21.8% 18.5%

GNP 17.4% 10.5% 6.9%Desert

Land area 29.6% 3.0% 26.6%

Population 18.0% 4.4% 13.6%

GNP 10.1% 3.2% 6.8%

Highland

Land area 7.3% 0.4% 6.9%

Population 6.8% 0.9% 5.9%

GNP 5.3% 0.9% 4.4%

Temperate

Land area 39.2% 8.4% 30.9%

Population 34.9% 22.8% 12.1%

GNP 67.2% 52.9% 14.3%

*Nearmeans within 100 kilometers of seacoast or

sea-navigable waterway;farmeans otherwise.

SOURCE:ANDREWD.M

ELLINGER



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Polar

Temperate-snow

Desert-steppe

Tropical-subtropical

Highland

farm worker in tropical regions tends todiminish the size of cities, which dependon the agricultural hinterland for theirsustenance. With a smaller proportionof the population in urban areas, therate of technological advance is usuallyslower. The tropical regions thereforeremain more rural than the temperateregions, with most of their economic ac-tivity concentrated in low-technologyagriculture rather than in high-technolo-gy manufacturing and services.

We must stress, however, that geo-graphical factors are only part of the sto-ry. Social and economic institutions arecritical to long-term economic perform-ance. It is particularly instructive to com-

pare the postWorld War II performanceof free-market and socialist economiesin neighboring countries that share thesame geographical characteristics: Northand South Korea, East and West Ger-many, the Czech Republic and Austria,and Estonia and Finland. In each casewe find that free-market institutionsvastly outperformed socialist ones.

The main implication of our findingsis that policymakers should pay moreattention to the developmental barriersassociated with geographyspecifically,

poor health, low agricultural produc-

tivity and high transportation costs. Forexample, tropical economies shouldstrive to diversify production into man-ufacturing and service sectors that arenot hindered by climate conditions. Thesuccessful countries of tropical South-east Asia, most notably Malaysia, haveachieved stunning advances in the past30 years, in part by addressing publichealth problems and in part by movingtheir economies away from climate-de-pendent commodity exports (rubber,palm oil and so on) to electronics, semi-conductors and other industrial sectors.They were helped by the high concen-tration of their populations in coastalareas near international sea lanes and

by the relatively tractable conditionsfor the control of malaria and othertropical diseases. Sub-Saharan Africa isnot so fortunate: most of its populationis located far from the coasts, and itsecological conditions are harsher onhuman health and agriculture.

The World Bank and the InternationalMonetary Fund, the two internationalagencies that are most influential in ad-vising developing countries, currentlyplace more emphasis on institutional re-formsfor instance, overhauling a na-

tions civil service or its tax administra-

tionthan on the technologies needed tofight tropical diseases and low agricul-tural productivity. One formidable ob-

stacle is that pharmaceutical companieshave no market incentive to address thehealth problems of the worlds poor.Therefore, wealthier nations shouldadopt policies to increase the companiesmotivation to work on vaccines for trop-

ical diseases. In one of our own initia-tives, we called on the govern-ments of wealthy nations to fostergreater research and developmentby pledging to buy vaccines for

malaria, HIV/AIDS and tuber-culosis from the pharmaceuti-cal companies at a reasonable

price. Similarly, biotechnologyand agricultural research companiesneed more incentive to study how to im-prove farm output in tropical regions.

The poorest countries in the worldsurely lack the resources to relieve theirgeographical burdens on their own.Sub-Saharan African countries have percapita income levels of around $1 a day.Even when such countries invest asmuch as 3 or 4 percent of their GNP inpublic healtha large proportion of na-tional income for a very poor countrythe result is only about $10 to $15 peryear per person. This is certainly notenough to control endemic malaria,much less to fight other rampant dis-eases such as HIV/AIDS, tuberculosisand helminthic infections.

A serious effort at global developmentwill require not just better economicpolicies in the poor countries but farmore financial support from the richcountries to help overcome the specialproblems imposed by geography. A pre-liminary estimate suggests that even amodest increase in donor financing ofabout $25 billion per yearonly 0.1percent of the total GNP of the wealthynations, or about $28 per personcouldmake a tremendous difference in reduc-ing disease and increasing food produc-

tivity in the worlds poorest countries.

www.sciam.com Scientific American March 2001 75

The Authors

JEFFREY D. SACHS, ANDREW D. MELLINGER and JOHN L.GALLUP conducted the research for this article under the auspices of Har-vard Universitys Center for International Development (CID). Sachs is CIDsdirector and serves as an economic adviser to governments in eastern Europe,the former Soviet Union, Latin America, Africa and Asia. Mellinger is a re-search associate at CID specializing in the multidisciplinary application ofgeographic information systems. Gallup is founder of developIT.org, whichprovides free technical support for information technology users and e-com-merce in developing countries, and was recently a research fellow at CID.

Further Information

An Inquiry into the Nature and Causes of the Wealthof Nations. Adam Smith. Reprint. Modern Library, 1994.

Guns,Germs,and Steel: The Fates of Human Societies.Jared Diamond. W. W. Norton, 1997.The Wealth and Poverty of Nations: Why Some AreSo Rich and Some So Poor. David S. Landes. W. W. Nor-ton, 1998.

Additional data and research papers are available at www.cid.harvard.edu and sedac.ciesin.org on the Web.

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