The readings have indicated that geography and institutions have played a significant role in indicating the high divergence in the economic development in different regions of the world. For instance, some nations have developed and become wealthy while others have remained in a state of relative poverty despite the resources allocation. According to the readings, geography has contributed in explaining global differences in development in that it affects work ethics in different regions. Different areas are affected with different diseases that lower the productivity levels of the people. As a result, people in the affected regions produce minimal compared to others who have developed resistant to diseases. They, as a result, benefit from the large scale of production that lowers their production costs and increases their profitability in the global market. The readings have also indicated that despite the facts that different regions could have conditions that are similar to others, they can end up experiencing differences in the rate of development. The results could be caused by the factors like resources allocation. For instance, regions that have their resources allocated nearness to the manufacturers incur low transportation costs as a result of increased ease of transport.
The readings have also indicated that the geography determines the types of crops to be grown. For instance, regions that receive high rainfalls can be productive compared to others that experienced short or no rains throughout the year. For instance, comparing Sub-Sahara parts of Africa with Western nations that receive high rainfall on a yearly basis, it will be evidenced that low rainfalls contribute to the high rate of poverty in the region. Similarly, geography acts as the main contributor in that some regions are more fertile than others. Regions that are fertile are expected to have great produce throughout the year compared the low production rates in less fertile regions. The readings have used arguments of Jared Diamonds that indicate how regions that have resources like guns and steel prospered than the others that were deficient of these resources. The results also supported the unequal diffusion of technology in different regions of the world. The readings have used the four sets of factors that were used in Diamond’s thesis to explain the divergence in economic development as a result of the geographical distribution. They include species of animals and plants that are found and domesticated in different regions, geographical barriers, diffusion between continents and the population size in an area. The readings have also indicated Institutions as a major pillar of the economy of a nation. They have indicated that divergence in economic development could be as a result of the social and political organization of the society. The structure can form explicit or implicit rules and norms that determine the social interactions in the region. Institutions can be inclusive or extractive.
Analysis and Critique
It can be argued that location of the resources contribute significantly for the Industrial Revolution. Coal was the important resources addressed in determining economic prosperity. The location of core deposits was also a determining factor concerning how the region would benefit and it also determined the possibility of industrialization. For example, England’s coal was located near to the manufacturers. The region also benefited from the advantages of having available water transport that lowered transportation costs. When comparing the friendly geographical allocation of resources to that of China, although the latter had large coal reserves the location was unfriendly and very far from the manufacturers. China was hence relatively disadvantaged comparing it with Europe regarding geographic distribution of resources. Its products were expensive and were not competitive in the market (Pomeranz 32).
Institutions were among the factors that resulted in the vast divergence in the industrial development. The idea is that institutions play a significant role in attracting investors. For instance, inclusive institutions contribute in protecting the property rights and in providing an equal ground to compete for the available opportunities. They also help in giving incentives to the investors to enhance adoption of new technologies. These institutions will hence attract investors to carry out investments and hence increase the production rate of the region. Extractive institutions siphon resources from citizens and direct them to the few wealthy members of the society. They hence cause unequal distribution of wealth and increase the poverty level among the majority group. Extractive institutions created obstacles preventing the adoption of the new and superior technology. The institutions hence discourage investments and hence affect the production rate of the region in a negative manner (Redding and Venables 67).
The readings can be criticized in that Institutions and Geography are not the only factors to be considered when determining the global differences in the development. China can be demonstrated as one of the regions that had competitive markets and sophisticated legal systems that protected the property rights. It is also evidenced that in Europe there were a plethora of institutions and the laws that were opposing capitalists. They contributed in preventing economic development. China had allowed more free marketplace than it was evidenced in Europe. Other factors also play a significant role to determine the global difference in the development, for instance, intellectual levels of citizens, the available market for the products, levels of investment, and technological advancements (Pomeranz 35).
Pomeranz, Kenneth. The great divergence: China, Europe, and the making of the modern world economy. Princeton, NJ: Princeton University Press, 2009.
Redding, Stephen, and Anthony J. Venables. “Economic geography and international inequality.” Journal of International Economics 62.1 (2004): 53-82.