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A Perfect Storm: First-Nature Geography and Economic Development

Author

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  • Christian Vedel

    (University of Southern Denmark)

Abstract

Is geography destiny? What is the role of first-nature geography in determining prosperity? This paper estimates the effect of randomly removing and introducing favorable first-nature geography to a specific region using a difference in difference design. In 1825 a storm created a new natural navigable waterway, bringing trade and prosperity to the otherwise relatively isolated northwestern Denmark. 700 years prior, the same event happened in reverse, when a previous channel closed up between 1086 and 1208. The elasticity of geography-induced market access is estimated to be 1.6, corresponding to 26.7 percent population growth within a generation of the event. Demonstrated mechanisms include trade, fertility, fishing, and the rise of manufacturing. The central finding is replicated in reverse in a register of dated archaeological sites. The 1086-1208 closing caused fewer buildings and sites containing coins. The general insight is the same: First-nature geography determines the levels and location of prosperity.

Suggested Citation

  • Christian Vedel, 2024. "A Perfect Storm: First-Nature Geography and Economic Development," Working Papers 0262, European Historical Economics Society (EHES).
    • Handle: RePEc:hes:wpaper:0262
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    References listed on IDEAS

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    1. 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.
    2. 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).
    3. 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.
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    Cited by:

    1. 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).
    2. 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.

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    Keywords

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    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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