Dec 14, 2011

Acemoglu on Culture and Geography as Determinants of the Wealth of Nations

We are conditioned to think of factors such as culture and geography as so determining because we see them as immutable. They’re there and therefore they must be important. How could it not be important that Mexico City is so much warmer than New York? How could it not be important that some people are Muslim and others are Christian? But actually none of it is really as obvious as it appears. In early chapters, we document how many parts of the world that are very prosperous today were relatively backward at the time Europeans arrived to colonise them. Yet places like Mexico or Peru were then among the most civilised and developed. It was the set of political and economics institutions that were differentially imposed on these places that led to a reversal and a divergence. The same thing is true for cultural and religious values. The association between these and economic outcomes has not been immutable. Often they are consequences of the different political histories that these places have endured.

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