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A Perfect Storm: First-Nature Geography and Economic Development

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  • Christian Vedel

Abstract

In 1825 a storm cut a new channel through Denmark's Limfjord, providing an exogenous shock to first-nature geography. Difference-in-differences estimates show the channel increased trade immediately and, within a generation, lifted population by 26.7 percent - an elasticity of 1.6 relative to the improved market access. Higher fertility and economic growth of new industries, not migration, drove the expansion. A mirror experiment - the waterway's closure circa 1086-1208 - caused symmetric declines in medieval coin and building finds, bolstering external validity. These results offer the first robust causal evidence that first-nature geomorphology shapes the location of economic activity.

Suggested Citation

  • Christian Vedel, 2024. "A Perfect Storm: First-Nature Geography and Economic Development," Papers 2408.00885, arXiv.org, revised May 2025.
    • Handle: RePEc:arx:papers:2408.00885
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    References listed on IDEAS

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    1. Marc Klemp & Niels Framroze Møller, 2016. "Post-Malthusian Dynamics in Pre-Industrial Scandinavia," Scandinavian Journal of Economics, Wiley Blackwell, vol. 118(4), pages 841-867, October.
    2. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2004. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," Journal of Economic Growth, Springer, vol. 9(2), pages 131-165, June.
    3. Ager, Philipp & Eriksson, Katherine & Hansen, Casper Worm & Lønstrup, Lars, 2020. "How the 1906 San Francisco earthquake shaped economic activity in the American West," Explorations in Economic History, Elsevier, vol. 77(C).
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    Cited by:

    1. Tom Gorges & Magnus {O}rberg Rove & Paul Sharp & Christian Vedel, 2025. "Tracks to Modernity: Railroads, Growth, and Social Movements in Denmark," Papers 2502.21141, arXiv.org, revised Dec 2025.
    2. Marczinek, Max & Maurer, Stephan & Rauch, Ferdinand, 2025. "Networks in trade — Evidence from the legacy of the Hanseatic league," Journal of International Economics, Elsevier, vol. 157(C).

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    More about this item

    JEL classification:

    • N01 - Economic History - - General - - - Development of the Discipline: Historiographical; Sources and Methods
    • N73 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Europe: Pre-1913
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

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