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Geography Matters: Reconsidering the Effect of Geography on Development

  • Michael Bleaney
  • Arcangelo Dimico

We decisively reject the hypothesis that geographical factors influence long-run only indirectly, through the quality of institutions. The direct influence of geography on per capita incomes is robust to the inclusion of a sub-Saharan Africa dummy and other tests. We obtain our results by replacing the usual instrument (settlers’ mortality) by stronger instruments for institutional quality (latitude, the share of the country in the temperate climatic zone). We also show that settlers’ mortality suffers from endogeneity with respect to institutional quality for early colonies, because of its dependence on nineteenth-century mortality data.

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File URL: http://www.nottingham.ac.uk/credit/documents/papers/08-14.pdf
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Paper provided by University of Nottingham, CREDIT in its series Discussion Papers with number 08/14.

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Handle: RePEc:not:notcre:08/14
Contact details of provider: Postal: School of Economics University of Nottingham University Park Nottingham NG7 2RD
Phone: (44) 0115 951 5620
Fax: (0115) 951 4159
Web page: http://www.nottingham.ac.uk/economics/

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  1. Stock, James H & Wright, Jonathan H & Yogo, Motohiro, 2002. "A Survey of Weak Instruments and Weak Identification in Generalized Method of Moments," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(4), pages 518-29, October.
  2. Olsson, Ola, 2007. "On the Institutional Legacy of Mercantilist and Imperialist Colonialism," Working Papers in Economics 247, University of Gothenburg, Department of Economics.
  3. Kaufmann, Daniel & Kraay, Aart & Mastruzzi, Massimo, 2005. "Governance matters IV : governance indicators for 1996-2004," Policy Research Working Paper Series 3630, The World Bank.
  4. William Easterly & Ross Levine, 2002. "Tropics, Germs, and Crops: How Endowments Influence Economic Development," NBER Working Papers 9106, National Bureau of Economic Research, Inc.
  5. Jeffrey D. Sachs, 2003. "Institutions Don't Rule: Direct Effects of Geography on Per Capita Income," NBER Working Papers 9490, National Bureau of Economic Research, Inc.
  6. Arvind Subramanian & Francesco Trebbi & Dani Rodrik, 2002. "Institutions Rule; The Primacy of Institutions Over Integration and Geography in Economic Development," IMF Working Papers 02/189, International Monetary Fund.
  7. John Luke Gallup & Jeffrey D. Sachs & Andrew D. Mellinger, 1999. "Geography and Economic Development," International Regional Science Review, , vol. 22(2), pages 179-232, August.
  8. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
  9. David Y. Albouy, 2008. "The Colonial Origins of Comparative Development: An Investigation of the Settler Mortality Data," NBER Working Papers 14130, National Bureau of Economic Research, Inc.
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