Abstract
This chapter discusses the influence of the environment and geography on prosperity and corruption and reviews some leading empirical works.
A direct and robust empirical relationship exists between the environment/geography and the prosperity of nations. For instance, countries located in the inter-tropical or equatorial zone tend to be poorer than those located in temperate zones. Seasonal dynamics lead ecosystems and societies to accumulate and manage more resources, while equatorial species and people tend to consume the available resources immediately rather than storing, accumulating, and reinvesting the excess capital.
An abundance of natural resources (i.e. fuels and minerals) tends to generate conditions for rent-seeking and corruption. Venezuela, Nigeria, or Arab countries are examples of countries located on the equator characterised by an abundance of natural resources and by high levels of corruption.
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Keywords
This section analyses the prosperity-environment/geography nexus and the corruption-environment/geography nexus. It concludes the theoretical review of this study.
1 Prosperity and Environment/Geography (4), (7)
A direct empirical relationship exists between the environment/geography and the prosperity of nations (Diamond, 1997; Sachs, 2001). Diamond (1997) found that several environmental factors enabled European states to prosper and conquer other continents. Such aspects include the availability of docile animals for domestication, access to a storable vegetal protein, or a favourable climate and environment (Diamond, 1997). Similarly, Sachs (2001) observes:
Perhaps the strongest empirical relationship in the wealth and poverty of nations is the one between ecological zones and per capita income. Economies in tropical ecozones are nearly everywhere poor, while those in temperate ecozones are generally rich. And when temperate economies are not rich there is tipically a straightforward explanation, such as decades under communism or extreme geographical isolation (Sachs, 2001, p. 1).Footnote 1
After controlling for the quality of institutions, Sachs (2003) empirically explains cross-country patterns of national income. The author claims that geography and environment affect per capita income even more directly than institutions. He found “a systematic gradation of average per capita income, with high latitudes both North and South showing higher per capita income than low, tropical latitudes” (Sachs, 2001, p. 4). Furthermore, Sachs (2003) observes that empirical studies:
have demonstrated that levels of per capita income, economic growth, and other economic and demographic dimensions are strongly correlated with geographical and ecological variables such as climate zone, disease ecology, and distance from the coast (Gallup et al., 1998; Mellinger et al., 2000; Gallup & Sachs, 2001; Sachs & Malaney, 2002, as cited in Sachs, 2003, pp. 1–2).Footnote 2
Latitude “impacts economic activity through insolation, precipitation, and other climatic factors” (Sachs, 2001, p. 4). Consequently, countries located in the inter-tropical or equatorial zone tend to be poorer than those located in temperate zones. Sachs argued that lower agricultural yields and greater mortality due to tropical diseases, for example, explain lower prosperity levels near the equator. For instance, lower food productivity in the equatorial zone is well documented due to factors such as: (1) the fragility and poverty of the inter-tropical soils, which lose their fertility rapidly; (2) a high prevalence of parasites and pests associated with the high biodiversity of the equatorial zone; (3) high costs on net photosynthesis due to high respiration and metabolic processes; and (4) enormous fluctuations in water availability (Gallup & Sachs, 2001; Sachs, 2003; Garcia, 2003, 2012).
Therefore, Brown and Lall (2006) explained 60% of per capita GDP variance across countries in terms of rainfall statistics and a binary variable accounting for war. Their analysis of global datasets shows a statistically significant relationship between greater rainfall variability and lower GDP per capita. The authors demonstrated that climate variability, notably rainfall variability, is a significant determinant of economic growth. The amount and variability of rainfall were significant factors in the prosperity “of early agricultural economies and contributed to the differences in the wealth of nations since the early 19th century” (Brown & Lall, 2006, p. 315). Furthermore, the authors claim that climate variability impacts can often be mitigated.
The relationship between latitude and savings provides another example of this association between environment/geography and prosperity. Ecosystem dynamics in the equatorial zone include high biodiversity and rapid nutrient cycling due to high temperatures, with low nutrient accumulation in soil (e.g. the Amazon forest). In contrast, seasonal dynamics and lower temperatures in temperate zones account for slow nutrient cycling and biomass accumulation. Temperate seasonal ecosystems, therefore, tend to accumulate more biomass in less biodiversity. Examples of this phenomenon include big sequoias in forests, the proliferation of large algae in the oceans, and big fat mammals. In comparison, equatorial ecosystems are highly biodiverse, but their individuals are much smaller than their temperate counterparts. Temperature and speed differences in nutrient cycles greatly determine the ethology of organisms. For example, temperate species must “save” fat and energy for winter (in order to prevent death). In contrast, equatorial species tend to consume the available resources immediately due to high competition (MacArthur, 1972; Garcia, 2003).
A similar dynamics may have encouraged human beings in temperate zones to store goods (e.g. grains, cheese, jam) for winter, and later to accumulate and reinvest the excess capital. In contrast, the permanent availability of natural resources (in the absence of seasons) means that humans in the equatorial zone tend to consume rather than store and invest.
This example might lead one to the assumption that the temperate countries located in the tropics of Cancer and Capricorn and beyond would exhibit better prosperity indicators on the whole. Thus, countries in the northern and southern hemispheres should be all prosperous and less corrupt than those on the equator. However, Russia and other former Soviet Union countries, located in the northern hemisphere, would be exceptions to this rule. Acemoglu and Robinson (2012) criticise the environment/geography approach to prosperity for its narrow scope. While explaining the prosperity differences between continents broadly, geographical determinism cannot account for variations within continents themselves (Acemoglu & Robinson, 2012).
Yet, in the Americas, this assumption would suffice to understand the prosperity of the USA and Canada and, to a lesser extent, of Brazil, Chile, Uruguay, and Argentina—in contrast with the poorer countries located on the equator (e.g. Venezuela). However, environmental and geographical determinism theory would not explain why South American countries (beyond the equator––e.g. Argentina) have lower prosperity and higher corruption rates or inequality than those of North America. Thus, although important, geography and the environment are merely two pieces of a giant puzzle. This is exactly where institutions (including religion) and other historical factors contribute to formulating feasible explanations (see Sect. 8.2.3).
2 Corruption and Environment/Geography (4), (7)
The trajectories by which geographical and environmental factors might affect corruption are mainly indirect and occur via economic development (Treisman, 2000, p. 430). In this respect, an abundance of natural resources (i.e. fuels and minerals) tends to generate conditions for rent-seeking and corruption (Leite & Weidemann, 1999; Ades & Di Tella, 1999). Specifically, an abundance of oil is found to increase the level of corruption in a country (Montinola and Jackman as cited in Lambsdorff, 2006, pp. 21–22). Venezuela, Nigeria, or Arab countries are examples of countries located on the equator characterised by an abundance of natural resources and by high levels of corruption.
Moreover, more natural resources (e.g. fuel) do not necessarily mean better environment quality (e.g. climate). Environment quality indicators are what Brown and Lall (2006), Sachs (2001), Diamond (1997), and others have associated with prosperity, and thus with transparency (Treisman, 2000). The Environmental Performance Index (EPI) aggregates some of those indicators besides others (see Sect. 5.6).
Empirical Expectation
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12).
I expect a robust positive relationship between the EPI and prosperity/transparency. However, I do not expect the EPI to explain the entire variability of GCI /CPI.
This chapter closes the theoretical description of the most prominent corruption/prosperity determinants referred to in Fig. 2.1. The next chapters explain the research paradigms, design, and methodology of this study.
Notes
- 1.
©2001 by Jeffrey D. Sachs. This content is not under a CC-BY licence and has been reproduced with permission.
- 2.
©2003 by Jeffrey D. Sachs. This content is not under a CC-BY licence and has been reproduced with permission.
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García Portilla, J. (2022). Environment/Geography and Prosperity/Transparency (E), (4), (7). In: “Ye Shall Know Them by Their Fruits”. Contributions to Economics. Springer, Cham. https://doi.org/10.1007/978-3-030-78498-0_12
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