Nathan Nunn, a development economist at Harvard, shares his insights on the factors that shape the development paths of nations.
Drawing from his diverse work history and research, Nunn discusses the role of history, culture, and contract enforcement in economic development, with a particular focus on the impact of the slave trade and the importance of state formation.
Contributors to Economic Success
Factors such as small population, ethnic homogeneity, and well-maintained historical social structure can contribute to a country’s economic success.
For instance, these factors have contributed to Botswana’s relative economic success, leading to more extreme outcomes in terms of economic development.
Ironically, places which otherwise would have been the best places to live were also the places for which you are most exposed to the slave trade. – Nathan Nunn
Challenges for Southern Parts of Africa
Southern parts of Africa face challenges in terms of trade due to their distance from most other places.
However, common language and religion, as well as genetic distance, can play a role in trade and income differences.
Slave Trade’s Impact on Economic Performance
There is a correlation between the number of slaves taken from a country and its long-term economic performance.
This correlation also holds true within individual countries.
For instance, regions within Nigeria that had many slaves taken from them have generally performed worse economically.
I think when you think about persistence, one thing that’s important is how much of the total variation does this factor in the past explain. – Nathan Nunn
Significance of State Formation
State formation is a critical factor in the economic success of countries.
For instance, Ethiopia’s history of successful states and empires has significantly contributed to its current success in nation-building.
This underlines the importance of political stability and effective governance in economic development.
Understanding Persistence
The concept of ‘persistence’ refers to the enduring impact of historical factors on a country’s development.
Grasping this concept can help predict the economic success of countries.
For instance, Ethiopia’s history of extreme poverty and involvement in the slave trade has not hindered its significant progress in nation-building, demonstrating the power of persistence.
Predicting Economic Growth
Countries with a history of successful and well-developed states, like the Democratic Republic of Congo, could indicate potential for economic growth based on the concept of persistence.
Despite its current low per capita income, its historical state formation could be a predictor of future economic success.
High Population Density Despite Slave Trade
Despite its history as a major exporter of slaves, Nigeria has a high population density.
The fertility of the soil and the ability to produce food could be factors contributing to this.
However, the population might have been even higher if not for the slave trade.
Slave Trade’s Effects on West Africa
In a Malthusian equilibrium, a measure of how well a region is doing could be its population rather than per capita income.
Nigeria, despite being a center for the slave trade, has a large population, which seems counterintuitive.
Slave Trade’s Influence on Population Distribution
The slave trade has significantly influenced the geographical distribution of populations in Africa.
It led people to move away from otherwise desirable locations, such as coasts and fertile plains, to more mountainous regions for protection.
This has resulted in persistent patterns in where people live within Africa.
Case Study: Cape Verde
Cape Verde, which was initially uninhabited and became a center for the slave trade, imported slaves and didn’t export them, avoiding the detrimental effects to indigenous institutions and the breakdown of traditional social structures.
Today, Cape Verde has a vibrant multi-party democracy and free speech.
Potential Future Development of East Africa
Historical persistence and long periods of trade with the Middle East could give Eastern Africa a leg up in future development.
However, this depends on the assumption that greater integration with China will be beneficial.
Distinguishing Societies from Locations
In the context of persistence, it’s crucial to differentiate between location-based and society-based persistence.
Evidence suggests stronger persistence based on societies rather than locations.
This insight is vital when investing in emerging economies, as it would be more beneficial to trace the people and not the places.
