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 g
that is the amount of g
kilometer
and what you can see from this map is that smith was absolutely correct
so what you can see is that where g
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 g
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 g
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 g
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 g
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 g
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 g
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
g
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