This essay is based on the working paper “The Ecological Origins of Economic and Political Systems” by Stephen Haber, Roy Elis, and Jordan Horrillo.

Why do wealthy countries tend to be stable democracies? Why do levels of per capita income and democracy also correlate with a range of other development indicators, such as investments in human capital, the strength of intellectual property systems, freedom from government expropriation, and financial development? More puzzling still, how do we explain the fact that prosperous democracies are not randomly distributed across the planet, but are geographically clustered? Even more puzzling, why did these patterns emerge only over the past two centuries?

We offer a theory that explains these puzzles, and then provide a battery of empirical tests designed to falsify it. The core of our theory is that human societies make costly investments in legal systems, political institutions, human capital, and the like when there is a return to doing so—that is, when there is a fundamental challenge that must be addressed. Until the mid- nineteenth century, when the combination of railroads, steamships, and refrigeration made it economically feasible to move staple foods over long distances, the fundamental challenge facing all societies was insuring against starvation under the constraints imposed by local climates and geographies. Plainly put, how humans could insure against starvation in a desert was different from how they could do so in a rainforest. What could be grown, how much of it could be grown, how far it could be moved, how long it could be stored, and how frequently it would be lost to severe widespread droughts varied systematically around the planet. Our first hypothesis is that those basic differences rooted in climate and geography generated different forms of social organization—different legal systems, stocks of human capital, lifeways, moral systems, social structures, and distributions of power.

The modern era (roughly the period since 1800) relaxed the constraints to insuring against starvation because staple foods could be moved vast differences at low cost. But modernity generated an entirely new fundamental challenge—the need to rapidly absorb a broad suite of mutually dependent legal, financial, educational, organizational, political, mechanical, chemical, and electrical technologies. Societies that were able to do so built fast-growing economies and powerful nation states capable of conducting industrialized warfare. Societies that were unable to do so were open to being colonized, dominated, or absorbed by those that had moved more quickly. Modernity was, in short, characterized by vicious geopolitical competition.

Our second hypothesis is that rates of absorption of the technologies of modernity varied because societies could not jettison overnight their preexisting forms of social organization without cost. They inherited stocks of human capital, systems of law, forms of contract and property rights, moral codes, lifeways, and distributions of power that had coevolved over the course of centuries.

Our third hypothesis is a corollary of hypotheses one and two. Because local factor endowments conditioned pre-1800 forms of social organization, and because those forms of social organization conditioned rates of technological absorption during the nineteenth and twentieth centuries, the distributions of economic development, human capital, democratic consolidation, and other indicia of prosperity that we observe across countries today are strongly correlated with those factor endowments. Geography and climate mattered for long-run development—but indirectly, by shaping the organization of societies.

We test these hypotheses by developing geo-spatial data sets that approximate, as closely as we can, the ecological characteristics that bounded the production, transport, and storage of calorie- and nutrient-dense foods ca. 1800 in the densely populated nuclei from which nation states later emerged.

We find that a vector of exogenous factors that bound constraints on food production, transport, and storage within the densely populated nuclei from which nation states later emerged account for 63 percent of the cross-country variance in per capita GDP today. Importantly, this vector accounts for progressively less of the variance in economic development (as measured by urbanization ratios) going back in time; before 1800 they account for almost none of it. We also find that a specific combination of factors that permitted some societies to insure against starvation through local trade is associated with faster economic growth from 1800 to 2000, faster democratic consolidation from 1850 to 2017, faster development of markets from 1500 to 1800, higher investment in trade-related human capital circa 1800, faster absorption of nineteenth-century technologies, and a lower probability of being colonized.

Our results should not be read as suggesting that climate and geography determined long-run paths of economic development in the sense that they lay down tracks from which societies could not deviate. If they did, our vector of factor endowments would account for more than 60 percent of the variance in present-day levels of economic development. Our interpretation is that the variance that remains unaccounted for is the product of idiosyncratic events, individual action, and human foresight. We suggest, however, that it would be a mistake to ignore the weight of the past in understanding why things are the way they are—and why changing how things are is typically not an easy task.

Read the full working paper here.

Stephen Haber is the Peter and Helen Bing Senior Fellow at the Hoover Institution and the A.A. and Jeanne Welch Milligan Professor in the School of Humanities and Sciences at Stanford University.

Research briefings highlight the findings of research featured in the Long-Run Prosperity Working Paper Series and broaden our understanding of what drives long-run economic growth.

overlay image