Jared Diamond, author of Guns, Germs, and Steel (amongst other books), reviews Daron Acemoglu’s and James Robinson’s Why Nations Fail. The latter two authors are, of course, skeptical of Diamond’s own theory of national inequality, which — (too?) broadly put — explains this phenomenon as originating from several geographic factors, including those considered in the review. These academics are truly giants in their field, and Diamond’s review is well worth reading. Much of it is convincing, but there are areas where I think he is less of an economist than he should be.
For instance, Diamond argues that there is evidence which shows an undeniable correlation between today’s poverty and geographic location. Specifically, the world’s — per capita — poorest nations are located in tropical belts sandwiched by temperate regions to the north and south. These tropical countries are characterized by widespread disease, such as malaria, and poor soil. These traits may be helpful in explaining why these societies, on their own, have not been able to develop strong inclusive institutions that stimulate (or, maybe more accurately, allow for) economic growth.
Yet, an economist knows that one of the great advantages of globalization — growing and strengthening international trade — is the increasing availability of economic goods (and ideas). Theoretically at least, it should have become easier for these societies to import the bulk of their food, allowing them focus on producing goods that are exchangeable on international markets. Other goods (that should be) available on the market are means of combating and treating malaria, which ought to at least mitigate the crippling problem of disease. This is one question that cannot be entirely answered by looking at geography, even considering Diamond’s point about the dilemma burdened by landlocked nations (Switzerland, after all, is landlocked, and so is much of the United States). Overtime, the division of labor helps overcome these obstacles, yet it has been incredibly slow in making headway in certain countries.
Nor do I think that Diamond’s correlation between the length of history of government and inclusive institutions convincingly suggests causation. I tend to agree more with Acemoglu and Robinson that much of it has to do with chance. The latter story helps explain why England, but not Spain. In other words, there are specific historical circumstances which gave rise to inclusive governments over certain societies. With regards to the developing world, Diamond touches on them a bit: colonialism did much to inspire extractive governments, especially where colonial governments were especially repressive and brutal. I think much of it also has to do with race. The United States, for instance, was a country of Englishmen, which helps explains differences in treatment when compared to Africa and India. This also helps explain why countries with denser native populations tended to be ruled by extractive colonial governments: large-scale English migration targeted sparser regions, since these provided an opportunity for English-dominated societies.
However, Diamond’s emphasis on a historical explanation of modern institutions, I think, is the right way to go. It is just that his own history is too ‘geography-centered.’ Perhaps what we need is a mixture between Diamond and Acemoglu–Robinson. Also, I am not convinced of Acemoglu’s and Robinson’s assertion that the geography-theory explains much less than most think it does. While it is true that perhaps Diamond stretches it a bit too far, it nevertheless helps explain initial inequities. It is just that a growing division of labor should be able to surpass these initial obstacles — after all, this is exactly what we have seen the division of labor do throughout history. Finally, I also see a lot of merit in Diamond’s argument that depletion of natural resources has much to do with continued poverty, but it has to be complimented by an Acemoglu–Robinson ‘institution’ theory.
We should not only look at factors within these societies, though. How the developing world overcomes its problems is affected by exogenous factors, especially the conduct of foreign nations. Two examples,
- How do regulations which shape the pharmaceutical industries in the developed world (i.e. those which, to a large extent, monopolizes them) affect the availability of drugs in the developing world? How can poorer nations access them if the source governments contain the potential of their industries to supply the goods? (This is similar to an argument that Stiglitz makes in Making Globalization Work);
- How do policies which control and distort — for better or for worse — food production make it more difficult (or easier) for foreign societies to import this basic necessity?
Sometimes, constraining policies in nations considered to have more “inclusive” governments disallow the division of labor to expand itself to less developed areas, handicapping natural growth. These too ought to be considered when attempting to explain why some nations remain so poor while others so wealthy.
Jared Diamond is certainly right to argue that the poverty of nations requires a multi-causal explanation. One problem with academics, and I have seen this elsewhere (such as migration theory), is that they too often focus on theories they have developed. There is a vested interest in proving the viability of your story. But all too often this leads to too strongly discouraging the adoption of alternative explanations. Like with many other things, the “true” answer may be found by a savvy synthesizer and not necessarily a great innovator.