Abstract:

We show that geography, through its impact on history, can have important effects on current economic development. The analysis focuses on the historic interaction between ruggedness and Africa’s slave trades. Although rugged terrain hinders trade and most productive activities, negatively affecting income globally, within Africa rugged terrain afforded protection to those being raided during the slave trades. Since the slave trades retarded subsequent economic development, within Africa ruggedness has also had a historic indirect positive effect on income. Studying all countries worldwide, we estimate the differential effect of ruggedness on income for Africa. We show that the differential effect of ruggedness is statistically significant and economically meaningful, it is found in Africa only, it cannot be explained by other factors like Africa’s unique geographic environment, and it is fully accounted for by the history of the slave trades.