How significant are geographical factors on economic growth?

Economic growth is affected by a number of factors given the wildly different levels of wealth between countries – the 80:20 principle states that 20% of the world’s population controls 80% of the world’s wealth is a powerful example of this. Whilst there is plenty that can be done to stimulate the development of a country, such as China’s booming manufacturing base, it is worth exploring the idea that some countries may have a cap put on their development by factors they cannot control. This may be the problem of being located on a major fault line, in an area prone to drought and desertification, or even being landlocked and therefore being limited on trade. Whilst there are a number of ways for measuring development, for the purposes of this piece of writing, it will be measured in GDP per capita.

There are examples throughout history of how the environment has affected civilisation, one of which is highlighted in chapter 5 of ‘Floods, Famines and Emperors’ in which the case of Abu Hureyra, a Neolithic village, is explored. This settlement was forced to adapt to climate change 11,000 years ago when ocean currents moving warm water in a ‘conveyor belt’ movement broke down meaning temperatures fell by roughly 8 degrees Celsius in the region. This meant many of the nut bushes and other sources of food retreated around one hundred kilometres away from the settlement. There is, of course, no GDP figure from this time when survival was the primary objective; something the citizens of Abu Hureyra were very successful at. Whilst the typical response to hardship at the time was to spread out further, the citizens of Abu Hureyra used their botanical expertise to instead make the switch to a farming community from a foraging one. Other similar sized settlements survived by domesticating animals such as sheep and goats. The simple issue with spreading out further is that the carrying capacity for hunter gatherers is much smaller than for farmers – indeed the carrying capacity for a world of hunter gatherers is said to be just 100 million whilst in the current world carrying capacity is thought to be 10 billion.

The case of Abu Hureyra, and indeed the breakdown of warm ocean currents that had originally supported a foraging lifestyle, provided the long-term catalyst for development of many more farming based societies such as the ones that appeared in Egypt and Mesopotamia around 3000BC. This is a useful historical example to have, but economies have changed significantly since then and there certainly won’t be any other examples of dramatic climatic change in the small timescale in which GDP is recorded. The case of Abu Hureyra seems to provide evidence for the Boserupian theory that the need for more food provision stimulates technological advancement. There is however a counter argument that suggests this may not be the case so much anymore, which could be highlighted with examples of natural events setting back the development of a country.

One of the main geographical factors worthy of discussion is how prone countries of differing levels of development are to natural disasters. Western and Northern Europe plays host to a significant number of countries with higher GDP per capita, such as Switzerland ($54,800) and Norway ($55,400). Natural disasters are rare in Europe as a whole with the lack of major fault lines running over the continent meaning earthquakes and volcanoes occur rarely. Floods do of course occur relatively often in Europe, with usually at least one significant flood event reported each year. However the death toll for these floods remains low, even some of the mostly deadly floods of recent times in Europe, the 2014 Southeast Europe floods, only claimed 86 lives. By contrast the 2010 Pakistan floods killed an estimated 2000 people. There are plenty other cases like this in developing countries – for example, 2404 people were killed in India in 2008, whilst 3189 were killed in the 2010 China floods. It would be wrong to say developed countries never suffer heavy casualties from flooding, 2005 Hurricane Katrina in the USA killed around 1800 people, but such events are clearly rarer in developed countries.

There are two reasons for this, and which of them is the most significant is up for debate. Evidently such natural disasters are more common in developing countries but the effects of disasters that do occur are typically much smaller in developed countries as they are better prepared to deal with flooding. The case studies of the 2009 Cumbria floods and 2010 Pakistan floods highlight this. There was actually more rainfall within 24 hours in Cumbria than in Pakistan (314mm compared to 274mm) but whilst 2000 died in Pakistan only 1 person lost their life in Cumbria. This is because of many factors, including better building standards, a more efficient warning system and a better emergency services and government response. On top of this, it can’t be ignored that the River Indus is a much larger river than the Cocker and Derwent and so flooding was more widespread in Pakistan. The effect of development of the floods in Pakistan is clear – financial cost came to £10billion, or 10% of GDP. This was particularly drastic in a country with an economy so dependent on agriculture. Two thirds of people in Pakistan depend on farming for their income and long term food shortages followed the floods. Indeed before the floods, 33% of Pakistanis lived below the poverty line, a figure that has since risen to 40%. The Cumbria floods meanwhile had a much smaller relative effect and have not significantly affected the UK economy at all.

A similar comparison can be made when considering volcanic eruptions as the chosen natural disaster. The 1995 volcanic activity on Montserrat at the boundaries of the North American and Caribbean plates only killed 19 people, but sparked economic recession that lasted until 2002. Indeed in 1996 real GDP fell by 21.5%. By contrast the 1980 St Helens eruption in the USA killed 57 people and had a higher volcanic explosivity index (VEI) as well as having a direct financial cost more than twice that of Montserrat. In the short term the local economy slowed, however since then tourism has gone up and soil fertility has improved due to the ash deposits. Clearly then natural disasters in developed countries, whilst hardly ideal, do not significantly affect development as the countries are able to deal with the effects. However, more often than not a significant natural disaster in a developing country, such as Pakistan or Montserrat, will start off a vicious cycle with GDP falling and damage to infrastructure, along with loss of life and long term health effects, preventing a quick recovery.

One significant component needed for a country to develop economically is an efficient trading system, something which can be restricted by the geographical location of a country. For example Malawi, in South-West Africa, is landlocked which contributes to its status as a peripheral country. It is connected to the sea by only one 800km train line which winds its way through to Nacala in neighbouring Mozambique. This was less of a problem in the 1980s when Malawi specialised in exporting food to drought stricken countries, but nowadays its main export is coffee beans – this is already hurt by EU tariffs on imports before the problem of being landlocked is even considered. Malawi’s economy is limited by another geographical factor as well: the lack of exploitable mineral resources in the country. These problems are reflected in Malawi’s GDP per capita which stands at just $900. Indeed Malawi is trapped inside a poverty cycle whereby the low economic output means citizens of the country make no savings or investments and wellbeing of the people is lacking. With low income there is little investment in services and industry and therefore no money to develop these sectors of the economy – meaning Malawi does not develop as far as it could. Whilst it would be naïve to suggest Malawi’s problems stem solely from the fact it is landlocked, it is definitely a significant factor in the country’s economic problems. The issue of landlocked and coastal economies can be highlighted with regions within a country, as well as just countries themselves.

Take India for example. The most successful and rich region is coastal Maharastra, which makes up a third of India’s total manufacturing. It also contains three international airports and twenty four universities. Landlocked Bihar by contrast makes up just 1% of India’s manufacturing. Indeed only 59% of the population in Bihar have access to electricity and literacy rate is just 64%. These regional differences are clear, and in many cases have been built up historically in times when international trade was nearly all done by sea, before air travel had boomed. In the current globalised economy these peripheral regions such as Bihar have more potential to develop, especially as a large number of financial transactions take place online rather than with cash being physically transported to different parts of the world. Support is still needed to dig Bihar out of its poverty cycle however; for example, it is clear at first glance that a region where 41% of the people do not have access to electricity that these online transactions would be impossible. This development of Bihar does seem to be occurring – Bihar is the fastest growing state in India in terms of gross state domestic product (GSDP), with a growth rate of 17.06% in 2015. This is in no small part due to government investment which allows for projects such as big industrial houses like Reliance Industries setting up, as well as a new software park being completed in Patna. On top of this an expressway from the Purvanchal border to Jharkhand has been completed to improve infrastructure. It is evident then that the disparities between so called core and peripheral reasons built up significantly before the world economy became largely globalised, and potential exists for peripheral landlocked regions and countries to close the gap now. However, this can only happen with aid or support from external sources, typically from the core regions that profited from their location historically.

One of the key geographical factors we have to consider is climate, which can have very negative effects on a country; causing a natural disaster in the form of drought followed by famine. One example is the famine of 2000 in Ethiopia which affected 43% of the population and killed 95% of livestock. It is these issues with climate that are typically highlighted but often a certain climate may actually aid the development of a country. Take Morocco for example, where average temperature in July is at 29 degrees Celsius, has a booming tourist industry due to its warm climate. Indeed tourism makes up 6.7% of Morocco’s GDP, playing a significant role in the economic development of the country. The benefits from this may be volatile in today’s world though with an ever increasing threat of terrorism in that part of the world potentially damaging future tourism. The potential to develop tourism in many countries often means stages of Rostow’s growth model are missed out. This model includes a take-off phase of industrialisation, where the secondary sector is dominant.

This never really occurred in the Gambia, with there being few important natural resources to exploit. Instead, the growth of the Gambia’s economy is largely focussed around developing tourism not only through typical ‘sun and sand’ holidays but also birdwatching and even encouraging a large number of African-Americans to visit and trace their roots. Whilst part of this tourist industry is evidently not reliant on climate it is clear the majority of the 15.8% of GDP it provides is reliant on the warm climate in the country. Furthermore the coastal location of the country, with beautiful natural beaches, is vital to the thriving tourist industry. Indeed the Gambia is focussing future development around the tourist industry as well, with the sector predicted to provide 17.6% of national GDP by 2025. It is worth remembering that whilst many developing countries suffer due to geographical factors surrounding their country, others may be able to thrive on their situation.

Geographical factors that affect the economy of a country may include climate, proneness to natural disasters, and location on the globe as well as others. It is clear simply due to geographical location on the planet countries such as Haiti or Malawi may suffer, whilst others such as Gambia or even countries in what might be considered a mild climate will gain. Geographical reasons are not the only thing affecting development – other significant factors such as historical, political, and socio-economic reasons must be considered. The weight of each factor varies from country to country depending on circumstances – the historical power the British Empire carried, along with the relatively early industrial revolution in England, was obviously a huge factor in the high level of development the UK now has. On the other hand countries typically exploited for the slave trade may have suffered in the long term from it. War is another major factor which may be more significant than any geographical circumstances – countries like Syria have had their development torn apart by conflict. It is clear that whilst geographical factors like the ones explored in this essay may affect development they are not completely limiting for a country.

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