Institutions Don't Rule: Direct Effects of Geography on Per Capita Income
By Jeffrey D. Sachs
NBER Working Paper No. 9490
Issued in February 2003
NBER Program(s):Economic Fluctuations and Growth, International Finance and Macroeconomics
In a series of papers, my colleagues and I have demonstrated that levels of per capita income, economic growth, and other economic and demographic dimensions are strongly correlated with geographical and ecological variables such as climate zone, disease ecology, and distance from the coast. Three recent papers purport to show that the role of geography in explaining cross-country patterns of income per capita operates predominantly or exclusively through the choice of institutions, with little direct effect of geography on income after controlling for the quality institutions. This note shows that malaria transmission, which is strongly affected by ecological conditions, directly affects the level of per capita income after controlling for the quality of institutions.