Location, Location: Geography and Economic Development

By Gallup, John; Sachs, Jeffrey | Harvard International Review, Winter 1998 | Go to article overview

Location, Location: Geography and Economic Development


Gallup, John, Sachs, Jeffrey, Harvard International Review


JOHN GALLUP is an Associate at the Harvard Institute for International Development (HIID), and JEFFREY SACHS is the Galen L. Stone Professor of International Trade at Harvard University and Director of the HIID.

Two centuries into the industrial age, much of the world remains mired in crippling poverty. Some benefits of modern development, especially gains in life expectancy and reduced infant mortality, have spread to nearly all parts of the world, though huge and tragic discrepancies remain even in those areas. However, in material well-being--as measured by gross domestic product per capita adjusted for purchasing power parity (PPP)--the gaps between rich and poor are stunning and show few signs of narrowing. According to data assembled by Angus Maddison for the Organization of Economic Cooperation and Development (OECD) in 1995, Western Europe outpaced Africa in average per capita GDP by a factor of around 2.9 in 1820 and by a factor of 13.2 by 1992. More stunningly, Maddison puts the African per capita income in 1992 at US$1,284 dollars (measured in 1990 PPP adjusted dollars), which is essentially identical to Maddison's estimate of the average GDP per capita in Western Europe in 1820. Only one area of the developing world, Asia, showed significant progress during the past thirty years, with average incomes rising from around US$1,212 in 1965 to US$3,239 in 1992. But now, much of that region is in crisis. In Latin America and the Caribbean, average income levels in 1992 (US$4,820) were only 6.6 percent higher than in 1974 (US$4,521).

In short, most of the world is poor. According to the World Bank, 85 percent of the world consists of developing countries. Much of the developing world is falling farther and farther behind the advanced countries in relative income levels. The economic development process is not working smoothly; in many parts of the world, it is not working at all.

An examination of 1995 per capita GDPs reveals two unmistakable geographical correlations with economic development. First, tropical countries (those located between 23.45 degrees N and S latitudes) are nearly all poor. Almost all high-income countries are in the mid- and high latitudes. Second, coastal economies enjoy higher incomes than their landlocked counterparts. Indeed, outside of Europe, there is no single high-income landlocked country, though there are 28 non-European landlocked countries.

To take a closer look at these patterns, we have examined the per capita GDP of all 150 countries in the world with a population of one million or more in 1995. In total, these 150 countries had a combined population of 5.65 billion in 1995, out of a global population estimated to be 5.67 billion. Therefore, this group of countries accounted for 99.7 percent of the world population. We define a tropical country as one in which half or more of the land area is within the geographical tropics. There are 72 tropical countries, with 41 percent of the world population, and 78 non-tropical countries, with 59 percent of the world population.

Among the tropical countries, the simple average of 1995 GDP per capita (not weighted by country population) is US$3,326. Among the non-tropical countries, the average is US$9,027, nearly three times greater. We calculate that 1.8 billion people, or approximately 32 percent of the world's population, live in the geographical tropics.

Out of the top thirty countries ranked by 1995 PPP-adjusted GDP per capita, only two are tropical, and these two, Hong Kong and Singapore, are tiny. These two countries account for a mere one percent of the combined population of the top 30 countries. Using geographic information system data, we can also examine the proportion of the population living in the geographical tropics in the top 30 countries, taking into account that four of the top 30 countries that we have not counted as tropical (Australia, Chile, Taiwan, and the United Arab Emirates) have a part of their populations in the tropical region. …

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