How Geography Affects The Economy Of A Country International Economics May 24, 2017 In Economics



Geographical disadvantages face by the nations outside of Eurasia include not having access to the best crops or large, not having docile animals to domesticate such as cows and sheep (which could be raised for livestock), living on a continent which stretches North to South instead of East to West (causing climate diversity which makes migration and expansion more difficult). African citizens also happened to be living in an area of the world which is especially susceptible to devastating tropical diseases such as Malaria (causing their population to be chronically ill and less productive). This caused some countries to grow less food and have a less diverse, less specialized labor sector.

Equally important was the differences in government policy over time. Europe happened to have a less rigid class system and more strictly enforced private property rights, giving citizens an incentive to work harder. Europe’s investment in exploration allowed it to discover huge natural resource deposits overseas, which it brought back home. Better policy decisions allowed Europeans to out compete their Eurasian counterparts in China and India.

Here’s some of the specific areas where climate can have a profound impact on economic development.

Climate

One of the most important factors in development is geography, where the country is in the world, and climate. It’s no coincidence that the poorest countries are in the tropics, where it is hot, the land is less fertile, water is more scarce, where diseases flourish. Conversely, Europe and North America profit from huge tracts of very fertile land, a temperate climate, and good rainfall.

In extremes of climate, either hot or cold, too much energy goes into the simple business of survival for there to be much leftover energy for development. You have to work twice as hard to get enough to eat out of the ground, you have to irrigate where others can depend on rainfall. It may be too hot to work between 11 and 2, so you lose three hours out of every day. Rain patterns may give you a short growing season, while others can get two harvests in one year. Some countries are just at a natural disadvantage.

Location

Secondly, geographical location plays a part in access to markets. All the great empires have been based around trade routes, and these are almost always maritime. There are notable exceptions, the medieval Mongol empire was based on the Silk Road from China to the west, but Jeffrey Sachs sums it up well in his important book The End of Poverty: ‘Many of the world’s poorest countries are severely hindered because they are landlocked; situated in high mountain ranges; or lack navigable rivers, long coastlines, or good natural harbours.’

China has three of the world’s busiest ports, and so does the US. With ports you can raise money through tolls and shipping services. If you have no access to the coast, not only do you miss out on these services, you have to transport everything by land, which is much more expensive. And what if your neighbours don’t like you? Ice-bound on its northern coastlines, Russian has squabbled for centuries over access to a warm water port, the Crimean War being the most serious. Countries like Afghanistan, Rwanda, Malawi, or Bolivia are all hindered by access to ports. Other countries, like Ethiopia or Lesotho, are not only landlocked, but mountainous as well, making trade even more expensive.

Resources

Thirdly, every country has been dealt a hand in natural resources. It takes infrastructure to capitalize on these, but some places have a distinct advantage over others. Oil is the most obvious. Nobody is any doubt about how Saudi Arabia or UAE make their money. Among other advantages, gold and diamonds have helped South Africa build the most successful economy on the continent. These are all non-renewable resources – once they’re gone, they’re gone, but while stocks last there is wealth to be made.

Besides these there are renewable resources – forests, fish, stocks that, if correctly managed, will refresh themselves. Much South American development has been based on the Amazon rainforest, in natural rubber and then timber.

Finally, there are what are sometimes called ‘flow resources’. These are renewables that need no management, wind, tide and solar resources. The Earth Policy Institute describes the American Great Plains as ‘the Saudi Arabia of wind energy’, while sunshine-rich places like California, Sicily and Portugal are able to invest in solar power. No natural resource is a license to print money, and there are plenty of poor countries who are rich in resources, but it is a factor.

Stability

Finally, environmental stability can be a factor in development. Some countries are more stable than others. Eastern Asian countries are more prone to tsunami disasters while tropical islands tend to have the risk of volcanic eruption. Furthermore, as sea levels rise, coastal areas will become increasingly affected by sea surges and tropical storms as well as hurricanes.

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