Geography and Development, Trade

welcome everyone today we're going to
begin a new unit we're going to be

talking about geography and development

and by john mcwethy amina relatively
immutable and constant features things

like a location

topography climb it

cluding temperature rainfall

so real quality our wildlife especially
parasites

and the influence of all of these on
development

this is obviously a big topic so today
which is going to focus on geography and

trade

so i want to begin by giving two
perspectives on trade

the first

is the recording perspective

so work are all set

went to countries specialize in their
comparative advantage

that is they specialize in producing the
good which they can produce at lowest

opportunity cost

and then the trade

both nations are better off

that i noticed that innovation is not
the focus of ricardo

to ricardo says are already or to the
one o'clock

we can get more of both goods

is portugal specializes in producing
wine

england specializes in producing clock
and then the trade

sofa ricardo

trade is about improvements in static
efficiency

notice also that in ricardo market size
is really not a key

variable

the situation is very different

adam smith

adam smith has a completely different
theory of trade

let's take a look at that

smith lays out his theory of trade in a
chapter in the wealth of nations

the division of labor is limited by the
extent of the market

and smith makes this remarkable and very
deep insight

he says

as by means of water carriage used by
ship and vote

and more extensive market is opened to
every sort of industry than wetland

carriage alone could afford it

so it is a part of the seacoast

along the banks of navigable rivers

that industry of every kind

nationally begins to subdivide

and improve

so glad adam smith is saying is that

when you're along a seacoast you have
access to a larger market you can sell

your goods in a larger market

and because of that

you get economies of scale but also you
get specializing shin of knowledge you

get people learning more

as we produce more

this creates improvements

so for adam smith's trade is a dynamic
growth story

trade

means larger markets

larger markets means more specialized
asian it means more improvements and

arledge

and therefore it means more

so let's take a look at adam smith's
theory at see if we can see it today

so what we have here is a map of gd

that is the amount of gd

kilometer

and what you can see from this map is
that smith was absolutely correct

so what you can see is that where gd

coast

here's the coastal united states and

on these navigable reverse the great
lakes region

you can also see

uh... western europe ok all along the
coast of all of this coastal area

western europe highly developed

well we're here to pan

and of course it's the coast of china

which is rapidly developing all do those
export markets

here again the coast of australia

now in fact what you can also see is
that even in places

where there are great institutions where
they have institutions of law and order

and property rights

and incentives and so forth there we can
still have low gd

for square a kilometer

to take a look at uh... canada

so most of canada it's it's like the
sahara desert

pay in terms of gd

uh... canada where canada is developed
it's along the coast and along the other

coworkers close to the united states

even in the united states

their entire regions which really are
bereft of gd

almost as a barren as is

the sahara desert

so if you're looking just at
institutions

you might say well

even in the united states where we have
these great institutions there's plenty

of places where there isn't much gd

and geography

particular closeness to rivers and
closest to the sea coast

is an important element of this

uh... by the way economists

really used to ignore geography

and it's due to jeff sachs and some of
his co-authors particular john gallup

and andrew melador

that a lot of this work started to be
done in addition to the article which

i've noted here

these three authors have a

a review article in scientific american
two thousand one

called the geography of poverty and
wealth which i recommend

it being close to rivers it being close
to the sea coast is important

then what is the worst thing

well the worst thing that can happen is
if you are

lancelot

let's take a look

so what we're showing here at the gd

access to the coast

overhear compared to countries which are
landlocked over here

and what you see immediately is that
countries which are landlocked

have half actually a little bit less

than half the gd

of countries which had access to the
coast

if we look here over the last over here
at the land-locked countries you can see

the saket fuel and loved ones in uh...
europe austria czech republic hungary

quests switzerland

but equally true these countries

are actually quite

close to the coast and they're close to
other rich countries

if you take those countries that the
defense has become

even more stark

among the uh... landlocked uh... nations

they're registered side of europe is
actually botswana

which has diamonds

pretty lucky for them

but you also notice is that all of these
countries here

they're all in africa

in fact africa

has more land locked countries than anne
other continent

let's take a close look at why this is
the case

okay here's a standard looking map of
the world you probably all sing them

before

it's not obvious from this map why
africa should be particularly landlocked

but there's also something funny about
this map something on it

take a look at greenland

greenland on this map looks huge looks
almost as big as africa

and yet and when you check the
statistics what you find is a greenland

is in fact eleven th the size of africa

what's going on

well this is actually an illusion

it's an illusion created by the
particular projection we've used the

market for protection

to project a three-d surface namely a
globe

onto two dimensions

whenever u

take a three-d service and you map it
into dimensions you're bound to get some

illusions

and in this case we get the allusion of

size

let's take a look at a different
projection

this is the albers projection which
maintains equal slices areas we're gonna

get some

uh... illusions about the shape

of continents

but we're going to get the right
equivalent sizes and on this projection

what you see quite correctly is that
greenland is much smaller than africa

what you also see is that africa

is huge

africa is an enormous continent

let's also show that in a different way

okay here's another way of looking at
africa and what you can see gan africa

is a big you can fit the entire united
states excluding alaska

into africa you can put china as well
into africa india can go into africa

eastern europe most of your peers a lead
germany france and spain and so forth

and remember that trunk in the united
states which is in land which had low

gd

well just map that into

africa

you can see

what it's going

here's another way of looking at this

let's go back to our projection

take a look at the coastline of africa

as the coastline of africa now compare
with the coastline of europe

when you have you got all these notes in
crannies in inlets and sees

is the plaque seeing over and over here
and so forth

fact what you find if you do this if you
measure the coastline

is the coastline of europe is two to
three times longer

the coastline of africa

two to three times by the way because he
can actually differ depending upon how

you measure those if you wards and so
forth

in uh... europe the fact all major of
coastline

makes a little bit arbitrary measure

basic point however is

europe it's a much smaller

than africa

and yet coastline of europe the access
to the ocean

access to the cc navigable rivers

much much larger

so europe as much more access to trade

and does africa

let's review briefly

from adam smith we have that seco send
navigable rivers

that lisa trade to larger markets larger
markets that means more specialization

and improvements in

knowledge and improvements in knowledge
lied to

in contrast with this if you're
landlocked you don't get those trade you

don't get radio get larger market

you don't get that specialize asian

you don't get that improvement in
knowledge

and instead you get

stagnation

again let's apply this to

adam smith in fact had the theory and
the application down in seventeen

seventy-six

he says there are in africa

none of those great inlets such as the
baltic in adriatic seas in europe the

meta trainee

and black sea but the europe and asia

to carry maritime commerce into the
interior parts

about great continent

and a great rivers of africa

prior to greater distance from one
another

to get occasion to any considerable in
land navigation

so adam smith nailed in seventeen
seventy-six

one of the key connections

between geography

between access to the coast access to
medical rivers

and development

maze ing there was an until some two
hundred or so years later

that jeff sachs and others

really began to pick this up

and bring it back into the growth story

one reason to

remember our history of economic lot

okay we'll be looking more at
development and geography in particular

malaria and other parasites and things
like that

and their influences

in the next lecture

thanks