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Does geography influence development?
As funny as the above statement may sound, there may be some truth to it. Ricardo Hausmann thinks differently. He believes that the geography of these developing countries, especially those that fall within the region 20 degrees north and south of the equator, is the underlying factor affecting the prosperity of these countries. Geography basically gives a sense of place. It defines an area; basically it is one of those factors that can determine if a region would be appreciated or despised. Although it may be a hindrance to development, human ingenuity has shown that geographical factors can be overcome with sufficient effort and investment.
Two issues, which Haussmann identifies in his paper, “Prisoners of Geography,” suggests the magnitude of the geographical impacts of economic progression include the development of both tropical and landlocked areas as compared to non tropical and coastal areas, respectively. Research by Gallup, Sachs and Mellinger for the World Bank does recognize that physical geographic features of a country impact development several ways: agricultural productivity, accessibility and disease. Accessibility opens up the particular country’s market to the competitive world market; with most of the world’s major trade occurring via navigable waters. Disease and agriculture are both dependent on climatic conditions, with agriculture being further linked to soil type.
Ricardo Haussmann states in ‘Prisoners of Geography’” that, “Nations with populations far from a coastline also tend to be poorer and show lower rates of economic growth than coastal countries.” Even the UNCTAD (United Nations Conference on Trade and Development) states that landlocked developing countries, “face severe challenges to growth and development.” Does this automatically mean that being landlocked directly implies underdevelopment? Can it be challenged that landlockedness could be advantageous in terms of development? Increased imports usually are accompanied with the idea that there is development within a state. However, development and underdevelopment of a country needs to be analyzed at a national level and a community level. The basic idea of development lies with an individual and his immediate social relationship- since the effects of underdevelopment being felt most strongly at the community level. . It must also be noted that while coastal states have easier access to trade, this accessibility means easier penetration into economic and cultural matters, which can make exploitation easier. However, the proposition that being landlocked may be an advantage for a society wishing to pursue a route of self-reliance may be a bit too idealistic. Even though landlocked countries can initiate trade with their neighbors, foreign exchange is necessary for internal development, to an extent.
One example of a landlocked state achieving levels of prosperity similar to states bordering coastlines, is Switzerland (It should be noted that Switzerland does not fall within the equatorial region that supposedly ‘suppresses’ development.) The Swiss’s success is partly due to the fact that they follow an export-oriented strategy, exporting high value goods and specialized services to offset high transport costs, but it must be noted that majority of its population lies in the low elevation north of the Alps, which have easy access to the North Atlantic by land and river bases traffic (Gallup, Sachs and Mellinger p. 5). In contrast, there are those coastal, well situated countries that have failed miserably to develop; Romania is cited in, ‘The Plight of Underdeveloped Countries,’ by Coyne and Leeson, as a temperate country where ‘widespread corruption and legal uncertainty,’ continue to plague the country.
Being landlocked can offer both opportunities as well as problems, good policy is necessary to exploit the advantages and minimize the problems. Events in an adjacent country can be used to the advantage of the landlocked state. Nepal, which shares a long land border with India can now benefit from India’s rapid growth due to extensive liberization of economic reforms, as per Sikkim University, whose forum on Economic Reform and Development Dynamics, has identified mutual benefits for both India and Nepal.
Hausmann also pinpoints geography as influencing the socio-economic condition of particular regions, namely, latitudes less than 20 degrees. While it is a factor, and it can be considered to be an influencing force in regional disparities, it cannot be blamed for ideologies manipulated by greed. Haussmann argues that the international community has taken the initiative to reduce the income gap between poor and rich countries. He further states that, “this commitment spawned the creation or redesign of instituitions such as the World Bank, specialized United Nations agencies such as the United Nations Development Programme and the United Nations Conference on Trade and Development, regional development banks such as the Inter-American Development Bank (IDB), bilateral aid agencies in the governments of the most advanced economies and innumerable foundations, research centers and non-governmental organizations.” Since the creation of these entities, the global gap has actually been accentuated. It seems that measures adopted to help these faltering countries have buried them deeper in debt!
The region 20 degrees north and south latitude, which Haussmann associates with poverty has a large percentage of countries with a colonial past. After being given independence, these former colonies were left to fend for themselves, many without a sense of direction- majority of them ultimately following the structure of government of their former masters and adopting their policies.
It seems that, a global pattern common throughout the “Third World,” many countries were forced to take loan agreements with the IMF due to lack of viable alternatives- after being demoralized by colonialism. These loans came with stringent rules, including opening up markets to foreign investors who took advantage of financially desperate citizens in the form of cheap labor. Furthermore, countries struggling to repay their loans were ‘advised’ to devaluate their currency (directly proportional to foreign exchange), raise interest rates and set wage guidelines (reducing the price of labor).
One such country that is experiencing the onslaught of the World Bank and IMF is Jamaica. According to the documentary, “Life and Debt,” which showcased workers sewing for 6 days for $30USD a week. Designated areas called ‘Free Trade Zones’ lined the port of Kingston, an area where the Jamaican Government had no authority, unions were not permitted (part of the stipulation)- foreign companies were allowed to bring their material tax free ( thus the name ‘free zone’) have them assembled and then transferred out to foreign markets. Forecasts by the IMF and World Bank have yet to be met in any country that they have loaned to. It seems that these countries have been placed in a perpetual cycle. Yes, geography does affect transport costs. But, it seems that these countries, through policies and greed, will not become rich, but will be subjected to never ending interest payments.
In conclusion, while Ricardo Hausmann does pinpoint (and pinpoint well) geography as an underlying cause of the economic plight of developing countries, there are many other factors that influence their status; however, the situation needs a more holistic view, as each contributor to economic inequality is equally important. Economically developed countries, instead of feigning concern and in the process, exploiting those less economically developed states through multinational corporations, need to encourage and harbor an atmosphere of cooperation, which can be mutually beneficial. Counteracting policies and technological developments can negate geographical obstacles, especially on a global scale. Changing policies of the IMF and World Bank It is also important to take into consideration, the changing nature of geographical nature with time, technological changes must also be addressed. Early civilizations of the highly fertile Nile, Indus, Tigris, Euphrates, Yellow and Yangtze rivers that harnessed high density populations who were ultimately disadvantaged by their remoteness to international trade. With the introduction and widespread use of the Internet, which provides a technical change reducing isolation, will require a highly educated population and a large investment in infrastructure. In comparison, the same expectations could have been said concerning the telephone, but even that has not made barriers created by geography obsolete.
Life and Debt. <http://lifeanddebt.org/index.html#news> Accessed May 5th 2009.
United Nations Conference on Trade and Development. Landlocked Developing Countries. <http://www.unctad.org/Templates/Page.asp?intItemID=3619&lang=1>
Accessed May 7th 2009.
Haussmann, Ricardo. SSC 307 Handout. ‘Prisoners of Geography.’
Gallup, Sachs, Mellinger. “Geography and Economic Growth. World Bank- Annual Bank Conference on Development Economics.
< http://www.worldbank.org/html/rad/abcde/sachs.pdf> April 1998. Accessed May 11th 2009.
Coyne, Leeson. The Plight of Underdeveloped Countries. Cato Journal.
< http://www.cato.org/pubs/journal/cj24n3/cj24n3-3.pdf> Accessed May 11th 2009
Sikkim University, BP Koirala Nepal-India Foundation. ‘Economic Reform and Development Dynamics: A Cross Border Dialogue between India and Nepal.’ 18-19, April, 2008, Gangtok.
<http://www.sikkimuniversity.in/webforms/download/Academic%20Collaberations.pdf> Accessed May 11th 2009
 Geography and Economic Growth, a paper prepared for the Annual Bank Conference on Development Economics.