The Diffusion of Development

Stanford Graduate School of Business Paper No. 1898

40 Pages Posted: 15 Jul 2005

See all articles by Enrico Spolaore

Enrico Spolaore

Tufts University - Department of Economics

Romain T. Wacziarg

UCLA Anderson School of Management; National Bureau of Economic Research (NBER)

Multiple version iconThere are 3 versions of this paper

Date Written: June 2005

Abstract

We provide a simple framework relating cultural distance, genetic distance and differences in income per capita. We estimate the model empirically by regressing current income differences between pairs of countries on measures of geographical and genetic distance (coancestor coefficients). We find a significant effect of genetic distance on income differences, while geographical distance (i.e., geodesic distance between major cities) is negative and insignificant when genetic distance is controlled for. Differences in latitude across countries help explain income differences even when genetic distance is controlled for, which is consistent with Jared Diamond's hypothesis regarding a Eurasian advantage in development. We uncover similar patterns of coefficients for differences in human capital, institutions, population growth, and investment rates. Finally, we estimate the structural effects of differences in institutions, human capital, population growth, and investment rates on differences in income per capita using our set of geographic and genetic distances as instruments. Overall, our findings support the view that environmental and cultural barriers play an important role in the diffusion of innovations and development across countries.

Suggested Citation

Spolaore, Enrico and Wacziarg, Romain T., The Diffusion of Development (June 2005). Stanford Graduate School of Business Paper No. 1898. Available at SSRN: https://ssrn.com/abstract=755166 or http://dx.doi.org/10.2139/ssrn.755166

Enrico Spolaore

Tufts University - Department of Economics ( email )

Medford, MA 02155
United States

Romain T. Wacziarg (Contact Author)

UCLA Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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