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Why are some countries stu-pendously rich and othershorrendously poor? So- cial theorists have been captivated by this question since the late 18th century, when Scottish economist Adam Smith addressed the issue in his magisterial work The Wealth of Nations. Smith ar- gued that the best prescription for pros- perity is a free-market economy in which the government allows businesses sub- stantial freedom to pursue profits. Over the past two centuries, Smith’s hypothe- sis has been vindicated by the striking success of capitalist economies in North America, western Europe and East Asia and by the dismal failure of socialist planning in eastern Europe and the for- mer Soviet Union.

Smith, however, made a second no- table hypothesis: that the physical geog- raphy of a region can influence its eco- nomic performance. He contended that the economies of coastal regions, with their easy access to sea trade, usually out- perform the economies of inland areas. Although most economists today follow Smith in linking prosperity with free markets, they have tended to neglect the role of geography. They implicitly as- sume that all parts of the world have the same prospects for economic growth and long-term development and that differences in performance are the result of differences in institutions. Our find- ings, based on newly available data and

research methods, suggest otherwise. We have found strong evidence that ge- ography plays an important role in shap- ing the distribution of world income and economic growth.

Coastal regions and those near navi- gable waterways are indeed far richer and more densely settled than interior regions, just as Smith predicted. More- over, an area’s climate can also affect its economic development. Nations in trop- ical climate zones generally face higher rates of infectious disease and lower agricultural productivity (especially for staple foods) than do nations in temper- ate zones. Similar burdens apply to the desert zones. The very poorest regions in the world are those saddled with both handicaps: distance from sea trade and a tropical or desert ecology.

A skeptical reader with a basic un- derstanding of geography might com- ment at this point, “Fine, but isn’t all of this familiar?” We have three respons- es. First, we go far beyond the basics by systematically quantifying the contribu- tions of geography, economic policy and other factors in determining a na- tion’s performance. We have combined the research tools used by geograph- ers—including new software that can create detailed maps of global popula- tion density—with the techniques and equations of macroeconomics. Second, the basic lessons of geography are worth repeating, because most economists have

ignored them. In the past decade the vast majority of papers on economic devel- opment have neglected even the most obvious geographical realities. Third, if our findings are true, the policy impli- cations are significant. Aid programs for developing countries will have to be revamped to specifically address the problems imposed by geography. In particular, we have tried to formulate new strategies that would help nations in tropical zones raise their agricultural productivity and reduce the prevalence of diseases such as malaria.

The Geographical Divide

The best single indicator of prosperi-ty is gross national product (GNP) per capita—the total value of a coun- try’s economic output, divided by its population. A map showing the world distribution of GNP per capita immedi- ately reveals the vast gap between rich and poor nations [see map on page 74]. Notice that the great majority of the poorest countries lie in the geographical tropics—the area between the tropic of Cancer and the tropic of Capricorn. In contrast, most of the richest countries lie in the temperate zones.

A more precise picture of this geo- graphical divide can be obtained by defining tropical regions by climate rather than by latitude. The map on page 75 divides the world into five R.J

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broad climate zones based on a classifi- cation scheme developed by German cli- matologists Wladimir P. Köppen and Rudolph Geiger. The five zones are trop- ical-subtropical (hereafter referred to as tropical), desert-steppe (desert), temper- ate-snow (temperate), highland and po- lar. The zones are defined by measure- ments of temperature and precipitation. We excluded the polar zone from our analysis because it is largely uninhabited.

Among the 28 economies categorized as high income by the World Bank (with populations of at least one million), only Hong Kong, Singapore and part of Taiwan are in the tropical zone, repre- senting a mere 2 percent of the combined population of the high-income regions. Almost all the temperate-zone countries have either high-income economies (as in the cases of North America, western Europe, Korea and Japan) or middle- income economies burdened by social- ist policies in the past (as in the cases of eastern Europe, the former Soviet Union and China). In addition, there is a strong temperate-tropical divide within countries that straddle both types of cli- mates. Most of Brazil, for example, lies within the tropical zone, but the richest part of the nation—the southernmost states—is in the temperate zone.

The importance of access to sea trade is also evident in the world map of GNP per capita. Regions far from the sea, such as the landlocked countries of South America, Africa and Asia, tend to be considerably poorer than their coastal counterparts. The differences between coastal and interior areas show up even more strongly in a world map delineat- ing GNP density—that is, the amount of economic output per square kilometer [see illustration on pages 70 and 71]. This map is based on a detailed survey of global population densities in 1994. Geographic information system soft- ware is used to divide the world’s land area into five-minute-by-five-minute sec- tions (about 100 square kilometers at the equator). One can estimate the GNP density for each section by multiplying its population density and its GNP per capita. Researchers must use national averages of GNP per capita when re- gional estimates are not available.

To make sense of the data, we have classified the world’s regions in broad categories defined by climate and prox- imity to the sea. We call a region “near” if it lies within 100 kilometers of a sea- coast or a sea-navigable waterway (a riv- er, lake or canal in which oceangoing vessels can operate) and “far” otherwise. Regions in each of the four climate zones we analyzed can be either near or far, re- sulting in a total of eight categories. The table on the next page shows how the world’s population, income and land area are divided among these regions.

The breakdown reveals some striking

patterns. Global production is highly concentrated in the coastal regions of temperate climate zones. Regions in the “temperate-near” category constitute a mere 8.4 percent of the world’s inhabited land area, but they hold 22.8 percent of the world’s population and produce 52.9 percent of the world’s GNP. Per capita income in these regions is 2.3 times greater than the global average, and population density is 2.7 times greater. In contrast, the “tropical-far” category is the poorest, with a per capita GNP only about one third of the world average.

Interpreting the Patterns

In our research we have examined threemajor ways in which geography af- fects economic development. First, as Adam Smith noted, economies differ in their ease of transporting goods, people and ideas. Because sea trade is less cost- ly than land- or air-based trade, econo- mies near coastlines have a great advan- tage over hinterland economies. The per-kilometer costs of overland trade within Africa, for example, are often an order of magnitude greater than the costs of sea trade to an African port. Here are some figures we found recent- ly: The cost of shipping a six-meter-long container from Rotterdam, the Nether- lands, to Dar-es-Salaam, Tanzania—an air distance of 7,300 kilometers—was about $1,400. But transporting the same container overland from Dar-es- Salaam to Kigali, Rwanda—a distance of 1,280 kilometers by road—cost

www.sciam.com Scientific American March 2001 73

ECONOMIC DISPARITIES can be partly attrib- uted to geography. Coastal temperate-zone countries such as Germany (opposite page) have lower transportation costs and higher farm productivity than landlocked tropical- zone countries such as Uganda (above).

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about $2,500, or nearly twice as much. Second, geography affects the preva-

lence of disease. Many kinds of infec- tious diseases are endemic to the tropi- cal and subtropical zones. This tends to be true of diseases in which the patho- gen spends part of its life cycle outside the human host: for instance, malaria (carried by mosquitoes) and helminthic infections (caused by parasitic worms). Although epidemics of malaria have oc- curred sporadically as far north as Boston in the past century, the disease has never gained a lasting foothold in the temperate zones, because the cold winters naturally control the mosquito- based transmission of the disease. (Win- ter could be considered the world’s most effective public health intervention.) It is much more difficult to control malaria in tropical regions, where transmission takes place year-round and affects a large part of the population.

According to the World Health Orga- nization, 300 million to 500 million new cases of malaria occur every year, almost entirely concentrated in the tropics. The disease is so common in these areas that no one really knows how many people it kills annually—at least one million and perhaps as many as 2.3 million. Wide- spread illness and early deaths obviously hold back a nation’s economic perform- ance by significantly reducing worker productivity. But there are also long- term effects that may be amplified over time through various social feedbacks.

For example, a high incidence of dis- ease can alter the age structure of a coun- try’s population. Societies with high lev- els of child mortality tend to have high levels of fertility: mothers bear many chil- dren to guarantee that at least some will survive to adulthood. Young children

will therefore constitute a large propor- tion of that country’s population. With so many children, poor families cannot invest much in each child’s education. High fertility also constrains the role of women in society, because child rearing takes up so much of their adult lives.

Third, geography affects agricultural productivity. Of the major food grains— wheat, maize and rice—wheat grows only in temperate climates, and maize and rice crops are generally more pro- ductive in temperate and subtropical cli- mates than in tropical zones. On aver- age, a hectare of land in the tropics yields 2.3 metric tons of maize, whereas a hectare in the temperate zone yields 6.4 tons. Farming in tropical rain-forest environments is hampered by the fragili- ty of the soil: high temperatures mineral- ize the organic materials, and the intense rainfall leaches them out of the soil. In tropical environments that have wet and

dry seasons—such as the African savan- na—farmers must contend with the rap- id loss of soil moisture resulting from high temperatures, the great variability of precipitation, and the ever present risk of drought. Moreover, tropical envi- ronments are plagued with diverse infes- tations of pests and parasites that can devastate both crops and livestock.

Many of the efforts to improve food output in tropical regions—attempted first by the colonial powers and then in recent decades by donor agencies—have ended in failure. Typically the agricultur- al experts blithely tried to transfer tem- perate-zone farming practices to the trop- ics, only to watch livestock and crops succumb to pests, disease and climate barriers. What makes the problem even more complex is that food productivity in tropical regions is also influenced by geologic and topographic conditions that vary greatly from place to place. The is- land of Java, for example, can support highly productive farms because the vol- canic soil there suffers less nutrient de- pletion than the nonvolcanic soil of the neighboring islands of Indonesia.

Moderate advantages or disadvan- tages in geography can lead to big dif- ferences in long-term economic per- formance. For example, favorable agri- cultural or health conditions may boost per capita income in temperate-zone na- tions and hence increase the size of their economies. This growth encourages in- ventors in those nations to create prod- ucts and services to sell into the larger and richer markets. The resulting inven- tions further raise economic output, spurring yet more inventive activity. The moderate geographical advantage is thus amplified through innovation.

In contrast, the low food output per

74 Scientific American March 2001 The Geography of Poverty and Wealth

Data for 1995 $465 – $1,999 $2,000 – $4,999 $5,000 – $9,999 $10,000 – $15,999 $16,000 – $44,000 No data

Tropic of Cancer

Tropic of Capricorn

GNP per Capita

WEALTH AND CLIMATE are inextricably linked. By com- paring world maps show- ing GNP per capita (right) and climate zones (opposite page), one notices that tem- perate-zone countries are generally much more pros- perous than tropical-zone nations. And in each climate zone, the regions near sea- coasts and waterways are richer than the hinterlands (table below).

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The Wealth of Regions Climate Zone (percent of world total) Near* Far*

Tropical Land area 19.9% 5.5% 14.4% Population 40.3% 21.8% 18.5% GNP 17.4% 10.5% 6.9%

Desert Land area 29.6% 3.0% 26.6% Population 18.0% 4.4% 13.6% GNP 10.1% 3.2% 6.8%

Highland Land area 7.3% 0.4% 6.9% Population 6.8% 0.9% 5.9% GNP 5.3% 0.9% 4.4%

Temperate Land area 39.2% 8.4% 30.9% Population 34.9% 22.8% 12.1% GNP 67.2% 52.9% 14.3%

* ”Near” means within 100 kilometers of seacoast or sea-navigable waterway; “far” means otherwise.

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Polar Temperate-snow Desert-steppe Tropical-subtropical Highland

farm worker in tropical regions tends to diminish the size of cities, which depend on the agricultural hinterland for their sustenance. With a smaller proportion of the population in urban areas, the rate of technological advance is usually slower. The tropical regions therefore remain more rural than the temperate regions, with most of their economic ac- tivity concentrated in low-technology agriculture rather than in high-technolo- gy manufacturing and services.

We must stress, however, that geo- graphical factors are only part of the sto- ry. Social and economic institutions are critical to long-term economic perform- ance. It is particularly instructive to com- pare the post–World War II performance of free-market and socialist economies in neighboring countries that share the same geographical characteristics: North and South Korea, East and West Ger- many, the Czech Republic and Austria, and Estonia and Finland. In each case we find that free-market institutions vastly outperformed socialist ones.

The main implication of our findings is that policymakers should pay more attention to the developmental barriers associated with geography—specifically, poor health, low agricultural produc-

tivity and high transportation costs. For example, tropical economies should strive to diversify production into man- ufacturing and service sectors that are not hindered by climate conditions. The successful countries of tropical South- east Asia, most notably Malaysia, have achieved stunning advances in the past 30 years, in part by addressing public health problems and in part by moving their economies away from climate-de- pendent commodity exports (rubber, palm oil and so on) to electronics, semi- conductors and other industrial sectors. They were helped by the high concen- tration of their populations in coastal areas near international sea lanes and by the relatively tractable conditions for the control of malaria and other tropical diseases. Sub-Saharan Africa is not so fortunate: most of its population is located far from the coasts, and its ecological conditions are harsher on human health and agriculture.

The World Bank and the International Monetary Fund, the two international agencies that are most influential in ad- vising developing countries, currently place more emphasis on institutional re- forms—for instance, overhauling a na- tion’s civil service or its tax administra-

tion—than on the technologies needed to fight tropical diseases and low agricul- tural productivity. One formidable ob-

stacle is that pharmaceutical companies have no market incentive to address the health problems of the world’s poor. Therefore, wealthier nations should adopt policies to increase the companies’ motivation to work on vaccines for trop- ical diseases. In one of our own initia-

tives, we called on the govern- ments of wealthy nations to foster greater research and development by pledging to buy vaccines for

malaria, HIV/AIDS and tuber- culosis from the pharmaceuti- cal companies at a reasonable

price. Similarly, biotechnology and agricultural research companies need more incentive to study how to im- prove farm output in tropical regions.

The poorest countries in the world surely lack the resources to relieve their geographical burdens on their own. Sub-Saharan African countries have per capita income levels of around $1 a day. Even when such countries invest as much as 3 or 4 percent of their GNP in public health—a large proportion of na- tional income for a very poor country— the result is only about $10 to $15 per year per person. This is certainly not enough to control endemic malaria, much less to fight other rampant dis- eases such as HIV/AIDS, tuberculosis and helminthic infections.

A serious effort at global development will require not just better economic policies in the poor countries but far more financial support from the rich countries to help overcome the special problems imposed by geography. A pre- liminary estimate suggests that even a modest increase in donor financing of about $25 billion per year—only 0.1 percent of the total GNP of the wealthy nations, or about $28 per person—could make a tremendous difference in reduc- ing disease and increasing food produc- tivity in the world’s poorest countries.

www.sciam.com Scientific American March 2001 75

The Authors

JEFFREY D. SACHS, ANDREW D. MELLINGER and JOHN L. GALLUP conducted the research for this article under the auspices of Har- vard University’s Center for International Development (CID). Sachs is CID’s director and serves as an economic adviser to governments in eastern Europe, the former Soviet Union, Latin America, Africa and Asia. Mellinger is a re- search associate at CID specializing in the multidisciplinary application of geographic information systems. Gallup is founder of developIT.org, which provides free technical support for information technology users and e-com- merce in developing countries, and was recently a research fellow at CID.

Further Information

An Inquiry into the Nature and Causes of the Wealth of Nations. Adam Smith. Reprint. Modern Library, 1994.

Guns, Germs, and Steel: The Fates of Human Societies. Jared Diamond. W. W. Norton, 1997.

The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor. David S. Landes. W. W. Nor- ton, 1998.

Additional data and research papers are available at www.cid. harvard.edu and sedac.ciesin.org on the Web.

Climate Zones