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Geography and Regional Economic Growth: The high cost of deviating from nature

Author

Listed:
  • Daniel Albalate

    (Department of Econometrics, Statistics and Applied Economics (Public Policy Unit). Universitat de Barcelona. John Keynes 1-11, 08034 Barcelona. Spain)

  • Germà Bel

    (Department of Econometrics, Statistics and Applied Economics (Public Policy Unit). Universitat de Barcelona. John Keynes 1-11, 08034 Barcelona. Spain)

  • Ferran A. Mazaira-Font

    (Department of Econometrics, Statistics and Applied Economics (Public Policy Unit). Universitat de Barcelona. John Keynes 1-11, 08034 Barcelona. Spain)

Abstract

We analyze the role of nature and geography in determining economic and social outcomes. We propose a theoretical model relating geography and nature to economic growth, and examine that model using data from NUTS 2 European regions. By doing this, we identify the predictive power of first-nature variables to explain regional population distribution. Then we analyze the effects of misadjustment between the actual and predicted distribution of populations on economic performance. Our results indicate that deviating from first-nature outcomes has a significant negative effect on economic growth. Furthermore, we find that departing from natural endowment has a negative effect on social cohesion. The main policy implication emerging from our analysis is that strategies that harmonize with nature and geography yield better social welfare and human well-being than those policies that conflict with them.

Suggested Citation

  • Daniel Albalate & Germà Bel & Ferran A. Mazaira-Font, 2020. "Geography and Regional Economic Growth: The high cost of deviating from nature," IREA Working Papers 202010, University of Barcelona, Research Institute of Applied Economics, revised Jul 2020.
    • Handle: RePEc:ira:wpaper:202010
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    More about this item

    Keywords

    Geography; Population; Growth; Conditional convergence; Inequality. JEL classification: O43; O44; Q57; R11; R12.;
    All these keywords.

    JEL classification:

    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth

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