International development #1

National Wealth

Produced assets + Natural resources + Net foreign assets − Liabilities

Produced Capital

Buildings, infrastructure, machinery, equipment, etc

Natural Capital

Land, subsoil resorces (oil), forests, fisheries

Human Capitial

Estimated present value of future labor earnings

Net Foreign assest

what a country’s residents own abroad - what foreigners own domestically

Finanical assests/liabilities:

Gov. and private sector holdings

GDP

Total market value of all final goods and services produced within a country’s borders, typically during a year

GDP PPP

ADJUSTED FOR PRICE/COST OF LIVING DIFF.

GNI

Income earned by a country’s residents, regardless of where it’s produced

Nominal

Current exchange rates

Real

Inflation adjusted

The Gini Coefficient

A stat. tool that measures economic inequality

The Lorenz Curve

Measures the actual distribution of income

Theil Index

Measures how far a distribution is from perfect equality by calculating a kind of “redundancy” or disorder in the income distribution

Theli compared to Gini

Useful for understanding the sources of inequality, not just the overall level.

How unequal is the world distribution of material things (e.g., income, health, education)?

Profoundly Unequal.

How have these patterns changed over time?

As Western nations industrialized, they grew exponentially richer while the rest of the world remained stagnant. Presently, rapid development is occurring in various regions; however, the gap still remains enormous.

What are the causes of intra-country inequality and poverty in the developing world? (pt1.)

Geography (Distance from the equator)

What are the causes of intra-country inequality and poverty in the developing world? (pt2)

• Major wars, depressions

• Growth – curvilinear (Kuznets curve)

• Trade openness, globalization

• Skill, education

• Marriage, family patterns

• Spatial: regional and urban/rural disparities

• Governance – taxation, public goods, rule of law, democracy

To what extent do geographic factors (climate, soil, access to rivers and seas, land mass

configurations, natural flora and fauna) affect long-term development?

Exert a profound influence on long-term economic and political development through two primary mechanisms: direct biogeographical and spatial drivers (determining early agricultural adoption, trade connectivity, and disease burdens) and indirect institutional pathways (shaping early factor endowments, land distribution, and social inequality).

Bio geography and Continental Axes

Eurasia's primary East-West Axis allowed domesticated plants, animals, and agricultural technologies to spread rapidly across similar latitudes, day lengths, and climates.

In contrast, North-South axes of the Americas and Africa presented severe climatic and environmental barriers that drastically slowed the diffusion

Availability of Domesticable Flora and Fauna:

Eurasia possessed a vast natural advantage in wild candidate species for domestication compared to Sub-Saharan Africa and the Americas.

Surplus and state formation

The rapid transition to agriculture enabled high pop. densities and food surplus. Surplus supported non-farming specialists, which accelerated the development of writing, technologies, political organizations, etc.

Trade and Waterway access

Navigable rivers, smooth terrain, and extensive coastal access lower transport costs, facilitating trade, economic specialization, and the rapid diffusion of ideas and technology.

In contrast, Landlocked status, rugged topography, and vast distances from waterways act as structural drags on growth

Climate and Health Headwinds

Equatorial and tropical climates impose direct costs on productivity through high disease burdens and severe agricultural constraints

Geographic Topography and European Competition:

Geographic diversity in Europe—marked by islands, peninsulas, and mountain ranges. —→encouraged political fragmentation into competing nation-states. —→ Continuous economic, military, and technological competition across these states drove continuous innovation and prevented individual rulers from stifling technological progress.

Tropical Climates and Concentration of Power:

Tropical climate favored high-value cash crops (sugar, coffee, tobacco). A dense indigenous population allowed forced labor systems to take place. Their geographic conditions created extreme initial inequality in wealth, human capital, and political power.

Institutional Persistence

Elites in these highly unequal plantation and mining economies established restrictive legal framework—such as restricted voting rights, limited property rights for non-elites, and severe underinvestment in public primary education—to preserve their privileges over centuries

Temperate Climates and Inclusive Growth in north america

favored small-scale family grain farming. This led to a homogeneous, relatively equal distribution of wealth, encouraging early democratic participation, open access to economic opportunities, universal public schooling, and rapid industrialization

Geographic constraints also explain persistent regional poverty pockets within modern developed nations

• Resource Depletion: Regions heavily dependent on extracted natural resources (such as coal in Appalachia) face severe economic stagnation when resources deplete or market demands shift.

• Physical and Infrastructure Isolation: Remote rural areas (such as the Mississippi Delta or isolated mountain communities) suffer from high transport costs, limited infrastructure (e.g., lack of high-speed internet), and weak local job markets, driving outward migration of educated youth and locking regions into persistent poverty traps