Research on Persistent Roots of Development

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A few papers of interest regarding the persistent effect of historical conditions (geographic or not) on subsequent development:

1. Marcella Aslan’s paper on the TseTse fly and African development is now out in the American Economic Review. I believe I’ve mentioned this paper before, so go read it finally. Develops an index of suitability for TseTse flies by geography, then shows that within Africa higher TseTse suitability is historically associated with less intensive agriculture, fewer domesticated animals, lower population density, less plow usage, and more slavery (If you are queasy about using Murdock’s ethnographic atlas, then avoid this paper). Marcella shows that TseTse suitability is currently related to lower light intensity (everyone’s favorite small-scale measure of development), *but* this effect disappears if you control for historical state centralization. The idea is that the TseTse prevented the required density from forming to create proto-states, and that these places remain underdeveloped. Great placebo test in this paper – she can map the TseTse suitability index of the whole world, and show that it has no relationship to outcomes. The TseTse is a uniquely African effect, and she is not picking up general geographic features.
2. James Ang has a working paper out on the agricultural transition and adoption of technology. Simple idea is to test whether the length of time from when a country hit the agricultural transition is related to their level of technology adoption in 1000 BCE, 1 CE, or 1500 CE (think “did they use iron?” or “did they use plows?”). Short answer is that yes, it is related. Places that experienced ag. transition sooner had more technology at each year. Empirically, he uses instruments for agricultural transition that include distance to the “core” areas of transition (China, Mesopotamia, etc..) and indexes of biological endowments of domesticable species (a la Jared Diamond, and operationalized by Olsson and Hibbs). The real question for this kind of research is the measure of technology adoption. We (meaning Comin, Easterly, and Gong) retrospectively code places as having access to technologies in different years. A worry is that because some places are currently poor (for non-agricultural reasons) the world never bothered to adopt their particular technologies, but that doesn’t necessarily mean they were technologically unsophisticated for their time.
3. Dincecco, Fenske, and Onorato have a paper out on historical conflict and state development. The really interesting aspect here is how Africa differs from other areas of the world. Across the world and over history (meaning from 1400 to 1799) wars are associated with greater state capacity today. That is, places that were involved in conflicts in the past are now stronger states (measured as their ability to tax) than those without conflict. The basic theory is that wars allow states to concentrate their power. However, historical conflict is unrelated to current civil conflicts…except in Africa. In Africa, historical wars are correlated with current civil conflicts, and this is associated with poor economic outcomes today, so things are bad on multiple fronts. Here’s my immediate, ill-informed, off-the-cuff analysis: In non-African places, wars generated strong states who were able to use their power to completely and utterly eliminate ethnic groups or cultural groups that were alternative power centers. They don’t have armed civil conflicts today because the cultural groups that might have agitated conflict were wiped out or so completely assimilated that they don’t exist any more. In Africa, central states were just not as successful in eliminating competing cultural groups, so they remain viable sources of conflict. Africa’s problem, perhaps, was a lack of conclusive wars in the past.

Persistence in Economic Development

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Last weekend I attended a conference at Brown University on “Deep-Rooted Factors in Economic Development“. The key theme that came out of that weekend was persistence. Nearly all of the papers gave evidence that economic shocks or initial differences in economic outcomes dissipate very, very slowly, if at all.

Oded Galor and Omer Ozak presented a paper on the origin of time preferences (e.g. patience). They find surprisingly strong empirical evidence linking inherent agricultural yields to survey responses regarding patience, with the argument being that places with high returns to settled agriculture (which requires patience) selected for higher patience populations over time. Stelios Michalopoulos, Louis Putterman, and David Weil presented evidence that African individuals descended from agriculturalist societies are more economically successful than those descended from pastoralists, even if we compare people who no longer reside in their traditional homelands. Both papers show the very long reach of history on current economic outcomes.

Related to this were a number of papers that looked at how economies responded to shocks. Eric Chaney and Richard Hornbeck showed that following the explusion of the Moriscos from Spain in 1609, the population and income per capita in the heavily-affected regions did not adjust immediately (i.e. in a decade) but over a much longer time frame (i.e. a century). Felipe Valencia-Caicedo provided evidence on the persistent effect of Jesuit missions in South America on human capital formation. Enrico Spolaore and Romain Wacziarg looked empirically at how long it took the “idea” of low fertility to spread from France across Europe. Melissa Dell presented work on how areas subject to insurgency during the Mexican Revolution (early 20th century) are still economically less developed than other areas of Mexico.

The fact that very early agricultural conditions are still influential in comparative development, or that economic shocks linger for centuries, is very hard to reconcile with how we typically think about economic growth. Even if one country/area starts with bad conditions, or is subject to a bad shock, all of our intuition is that they should eventually be able to catch back up. Physical and human capital can be accumulated through savings or education, and this accumulation should actually speed up the farther away from its potential that a country finds itself. Technological changes are, as we like to say, non-rival and non-excludable, so that countries can copy innovations relatively easily. While there is certainly a lag involved in either saving up new capital or adopting new technologies, we’re talking about lags measured in years, not centuries.

For technology, or productivity in general, it seems especially hard to understand long-run persistence. Why is it that poor places, or people, do not just adopt the higher-productivity techniques/ideas/processes that they see around them? My reaction to the papers I saw at Brown was that we are probably too cavalier in assuming that these ideas can be costlessly copied. We are probably better off thinking of ideas as embodied in people, like cultural traits. Ricardo Hausman just had an interesting post on this; he thinks knowledge is generally tacit, not explicit. Therefore it takes some kind of costly person-to-person transmission to move good ideas or techniques across populations.

With costly transmission, persistence makes more sense. We’re seeing the outcome of a slow diffusion of new ideas (on patience, fertility, the value of education, or agricultural techniques) through populations. That slow diffusion comes about because these ideas are transmitted as tacit knowledge from parents to children, masters to apprentices, teachers to students, or old employees to new employees. If a bad shock wipes out tacit knowledge (say by expelling experienced workers or changing the climate), then it isn’t necessarily true that an economy would eventually return back to its pre-shock equilibrium. Once the tacit knowledge is gone, its gone.

This is all telling me that I need to think harder about diffusion processes. Is there some kind of transmission of traits conducive to growth going on, either genetically (like in Galor and Moav, 2002) or culturally (like in Doepke and Zilibotti, 2008)? Are language differences and/or genetic differences the key to measuring the frictions in the diffusion process (like in Spolaore and Wacziarg, 2009)?

The reading list just keeps growing.