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Geography Is Policy

Summary:
For the last twenty years or so, Jeffrey Sachs and co-authors have been arguing that institutions and policy matter less than most economists think.  The harsh reality is that geography has a huge effect on countries' economic success.  From what I've seen, the Geography Matters camp is on to something: Even after correcting for national ancestry, high absolute latitude and coastal access continue to have huge economic payoffs.  In fact, geographic effects are much more robust than the effects of national ancestry.  Social scientists who accept the power of geography tend to get pretty pessimistic about development.  If poor countries adopted the institutions and policies of rich countries, they still wouldn't do very well.  Few go full fatalist.  But they do lose hope that economic

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For the last twenty years or so, Jeffrey Sachs and co-authors have been arguing that institutions and policy matter less than most economists think.  The harsh reality is that geography has a huge effect on countries' economic success.  From what I've seen, the Geography Matters camp is on to something: Even after correcting for national ancestry, high absolute latitude and coastal access continue to have huge economic payoffs.  In fact, geographic effects are much more robust than the effects of national ancestry

Social scientists who accept the power of geography tend to get pretty pessimistic about development.  If poor countries adopted the institutions and policies of rich countries, they still wouldn't do very well.  Few go full fatalist.  But they do lose hope that economic reforms can quickly transform the world.

And that's where the geo-centric economists are completely wrong.  Contrary to their own self-image, their view is radically optimistic.  Consider the extreme scenario where geography is the sole determinant of national prosperity.  Is there anything mankind could do to swiftly raise per-capita GDP?  Absolutely: Move people from poor countries to rich countries.  Is that the kind of thing that policy can change?  Again, absolutely: Legalize movement from poor countries to rich countries.  How much would that accomplish?  Given the draconian regulations now on the books, such deregulation would swiftly transform the world.

In the real world, of course, geography isn't the sole global problem, so deregulating migration isn't a full-blown panacea for global ills.  But if Sachs is remotely right, this deregulation is the closest thing to a panacea we've got.  Bad geography only retards human progress insofar as humans remain in locations with bad geography.   And once it's legal, humans will vacate the bad areas on a massive scale

To be fair, Jeff Sachs has written in favor of freer migration:

When high-income, high-productivity countries close their national borders to migration, they are denying the rights of individual migrants to seek improvement in their own conditions, and are also blocking a vital channel for improved global productivity. A global migration regime should favor migration both on account of the global efficiency gains and on account of the human right of individuals to seek their preferred residences (see Carens 2013, for a cogent ethical analysis from a human-rights perspective).

The global regime should pay special attention to emigration from the world's most impoverished regions, with special attention to those suffering from intrinsic barriers to development due to geographical, ecological, climatological, or other intrinsic factors. Migrants from such regions face the greatest need to emigrate but also the greatest obstacles. They tend to be poor, less educated, and with few familial or business contacts in high-income countries to facilitate their migration. These are the boat people drowning in the Mediterranean.

But to the best of my knowledge, Sachs never quite makes the fundamental point: Migration policy is the co-factor that makes geography important.  "Geography matters a lot" does not imply "Policy doesn't matter so much."  Instead, it implies that "Migration policy matters a lot."  Geography is not destiny, but opportunity.
Bryan Caplan
Bryan Caplan is Professor of Economics at George Mason University and Senior Scholar at the Mercatus Center. He has published in the New York Times, the Washington Post, the Wall Street Journal, the American Economic Review, the Economic Journal, the Journal of Law and Economics, and Intelligence, and has appeared on 20/20, FoxNews, and C-SPAN. Bryan Caplan blogs on EconLog.

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