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Institutions

From "Transaction Costs, institutions and economic performance" by Douglass C. North

Actions taken by organizations will attempt to acquire skill sets that offer the highest return to objective goals such as profit maximization or voter turnout, in order to enhance their chance of survival. <ref> North, Douglass C. "TRANSACTION COSTS, INSTITUTIONS, AND ECONOMIC PERFORMANCE." International Center for Economic Growth (n.d.): n. pag. Khousachonine.ucoz.com. Web.

Environmental Determinism

4.3.4 “Ruggedness, the Blessing of Bad Geography on Africa”

Abstract

-Geography matters due to its “contemporaneous effect on economic outcomes” and interaction with historical events.

-Attempt to use ruggedness as a variable to analyze geography’s importance on a societies success or demise.

-In Africa ruggedness was helpful as it prevented the slave trade from reaching certain areas, but was also detrimental as it prevented trade.

-The authors found that both effects are statistically significant and the net positive outweighs the net negative of slavery

-Slave trade is the independent effect

Direct Contemporanious Channel

SACHS

“Some authors stress a direct contemporaneous channel whereby geography directly affects economic outcomes today. For instance, Gallup and Sachs (2001) and Sachs and Malaney (2002) claim that a disease-prone environment has substantial negative consequences for current income levels because it reduces productivity, lowers the incentives to invest in human capital, draws scarce resources towards medical care, and discourages foreign investment and tourism (Nunn and Puga 2)

Others: Kamarack (1976), Sachs Melligner and Gallup (2000), Sachs (2001), Rappaport and Sachs (2003)

Indirect Historical Interactions

ACEMOGLUE, JOHNSON, and ROBINSON

“Alternatively, other authors stress an indirect channel whereby geography indirectly affects economic outcomes today through its past interactions with key historical events. For instance, Acemoglu, Johnson, and Robinson (2001) argue that the importance of a disease-prone environment for current income levels lies in the effect that it had on potential settler mortality during colonization. In areas were high mortality discouraged Europeans from settling, colonizers implemented poor institutions which adversely

affected subsequent economic development” (Nunn and Puga 2).

Others: Engerman and Sokoloff (1997,2000,2002), Diamond (1997), Acemoglue, J and R (2002)

-Paper looks to examine paradox of why bad geography worked in Africa

2.

-they use the “terrain ruggedness index” devised by Riley, DeGloraia, and Elliot (1999) to quantify topographic heterogeneity that may have been advantageous in the Geographical Survey 1996 to conduct their research

3.

-for the economic variable on geography, the indirect is as least as large as the contemporaneous option

-controls were set up for availability of diamonds and soil fertility so that these two variables would not effect the data

-Also controlled for disease and distance to the coast

NOTE: Rappaport and Sachs (2003) Coast access is fundamental determinant for income differences

Conclusion

-Has some real good stuff about the past and future effects

4.2.3 Tse Fly

Summary:

“Using insect population growth models and laboratory experiments of TseTse physiology, a suitability index for TseTse was constructed. This index was then joined with ethnographic data on pre-colonial African agricultural practices, institutions, and urbanization” (406).

- ‘TseTse has been hypothesized to have hindered the ability of

Africans to generate an agricultural surplus and transport goods overland easily” (383).

-“The TseTse is estimated to have had substantial effects on precolonial Africa: a

one standard deviation increase in the TSI is associated with a 23 percentage point

decrease in the likelihood an African ethnic group had large domesticated animals, a

9 percentage point decrease in intensive cultivation, and a 6 percentage point reduction in plow use”

-Societies with animals in Europe were less prone to rely on gender roles in farming and instead used animals to pull plows

-Slavery was ended much faster in these nations because they did not need to rely on manpower.

-Animal dung provided many uses and without it as a farmer in 1795 said,  “No dung—no turnips—no bullocks—no barley—no clover nor…wheat” (quoted in Overton 1996, p. 1).

Impact on Institutions

-If the Tse Fly effected human’s ability in Africa to breed and herd livestock, and thus make it difficult farming as well, the societies that developed would likely be less centralized. The net effect of the fly in this scenario would be a more mobile society that would be unable to form large groups due to the need for small groups of subsistence hunters. The argument here is that a centralized state would be prevented from forming and humans would be unable to form any kind of society above the local level (387).

-TIE INTO HERBST (Sarah’s book)

-Hebst:impediments to state building 1. Low population density 2. High transport costs

-A one standard deviation increase in the TSI is associated with a statistically significant 10.1 percentage point increase in the probability an African ethnic group used slave labor (395)

CONCLUSION- TSE Support

Comtemporaneous

“The findings suggest that TseTse-associated disease continues to influence development, mainly through its effect on precolonial centralization; thus providing support for the Sokoloff and Engerman (2000) view that endowments may shape institutions and thereby have long-run effects”

Historical

“On the other hand, the distribution of cattle exhibits a negative correlation with the TSI, conditional on country fixed effects and local, historical institutions”

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