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Unfavorable land endowment, cooperation, and reversal of fortune

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  • Litina, Anastasia

Abstract

This research advances the hypothesis that reversal of fortunes in the process of economic development can be traced to the effect of natural land productivity on the desirable level of cooperation in the agricultural sector. In early stages of development, unfavorable land endowment enhanced the economic incentive for cooperation in the creation of agricultural infrastructure that could mitigate the adverse effect of the natural environment. Nevertheless, despite the beneficial effects of cooperation on the intensive margin of agriculture, low land productivity countries lagged behind during the agricultural stage of development. However, as cooperation, and its persistent effect on social capital, have become increasingly important in the process of industrialization, the transition from agriculture to industry among unfavorable land endowment economies was expedited, permitting those economies that lagged behind in the agricultural stage of development, to overtake the high land productivity economies in the industrial stage of development. Exploiting exogenous sources of variations in land productivity across countries the research further explores the testable predictions of the theory. It establishes that: (i) reversal of fortunes in the process of development can be traced to variation in natural land productivity across countries. Economies characterized by favorable land endowment dominated the world economy in the agricultural stage of development but were overtaken in the process of industrialization; (ii) lower level of land productivity in the past is associated with higher levels of contemporary social capital; (iii) cooperation, as reflected by agricultural infrastructure, emerged primarily in places were land was not highly productive and collective action could have diminished the adverse effects of the environment and enhance agricultural output.

Suggested Citation

  • Litina, Anastasia, 2012. "Unfavorable land endowment, cooperation, and reversal of fortune," MPRA Paper 39702, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:39702
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    Cited by:

    1. Carl-Johan Dalgaard & Holger Strulik, 2014. "Physiological Constraints and Comparative Economic Development," Discussion Papers 14-21, University of Copenhagen. Department of Economics.
    2. Duarte Nuno Leite & Óscar Afonso & Sandra Tavares Silva, 2015. "The Two Revolutions, Landed Elites and Education during the Industrial Revolution," FEP Working Papers 562, Universidade do Porto, Faculdade de Economia do Porto.
    3. Olsson, Ola & Paik, Christopher, 2016. "Long-run cultural divergence: Evidence from the Neolithic Revolution," Journal of Development Economics, Elsevier, vol. 122(C), pages 197-213.
    4. Olsson, Ola & Paik, Christopher, 2015. "Long-Run Cultural Divergence: Evidence From the Neolithic Revolution," Working Papers in Economics 620, University of Gothenburg, Department of Economics.

    More about this item

    Keywords

    Land productivity; Cooperation; Social Capital; Economic development; Agriculture; Industrialization;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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