1. Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 14-1 Simultaneous Determination of Income & Modernization: Culture as an income multiplier

2. Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 14-2 Value of Work Versus GDP per Capita: Leisure Rocks  Issue of Causation

3. Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 14-3 Relationship Between Trust & Investment: Social Capital Matters

4. Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 14-4 Ethnic Fractionalization Versus GDP per Capita: Homogeneity  Social Capital  Growth Africa’s Growth Tragedy

5. Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 14-5 Social Capability Versus GDP per Capita,1960: Question of Causation Experience with large enterprises Market orientation:specialization & trade Science-friendly Secular outlook High residual Low Residual

6. Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 14-6 Social Capability and Economic Growth

7. Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 14-7 Population Density Versus Economic Growth: Agglomeration  Economies  Growth

8. Geography and Development (clearly exogenous influence) Location & trade: access to oceans –Africa…lacking in ports, lacking in navigatible rivers –Access to centers of activity…gravity models/income potential Proximity  Technology spillovers…idea spillovers Eurasia land mass (Jared Diamond) –Many species of plants & animals Disease and immunity –Tech diffusion along same latitudes The Black Sea wheel Climate – temperate wealth –Disease environment/human vigor/farms can’t be A/C’d –What you produce matters: forward & backward linkages

9. Relationship Between Latitude and Income per Capita

10. Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 15-10 Latitude Versus Agricultural GDP per Agricultural Worker

11. Political & Economic Geography European states  competitive pressures –Stagnate & die –Move from despot Natural Resources –Fertile land  Immigration & growth –Resources + institutions: extractive institutions stifle development West Indies plantations/Bolivian mines –Natural Capital (World Bank Measure) Helps income where data available…but slows growth

12. Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 15-12 Natural Capital Versus GDP per Capita

13. Copyright © 2009 Pearson Education, Inc. Publishing as Pearson Addison-Wesley 15-13 Figure 15.3 Core Areas in Preindustrial Europe

14. The Resource Curse: Dutch Disease Redux Windfalls High consumption  low saving  low investment Exuberance  Indebtedness Natural resource exports  delayed industrialization Ladder of industrial development Are backward & forward linkages exploited? - Transport network/Financial Infrastructure