Institutions and Geography in Economic Development: A Heterodox Economic Discussion

The debate about comparative roles of geographical and social (institutional) factors in economic development has been continuing for more than one hundred years. The fundamental basis of the debate is consideration of the economic world from the perspective of the interrelationship between nature and society. Emerging heterodox economics, which go beyond the limitations of the methodological prerequisites of mainstream economic thought, contributes new ideas to this continuing discussion. It focuses on the study of evolutionary processes and the development of economic phenomena from the long-term historical perspective. At the same time heterodox economics seeks to build a bridge between the study of social and economic processes, on the one hand, and the environment in which they are carried out, on the other hand. Therefore, the environment, climate and geography became topics of study in heterodox economics. The paper focuses on the consideration of a ‘geographical hypothesis’ found in the works of modern Russian and foreign institutionalists. It shows that for the analysis of long-term economic evolution ‘geography matters’. This conclusion is confirmed by the results of empirical studies carried out in Russia and worldwide since the early 2000’s.