🌍 Why Some Countries Are Rich: The Geography of Wealth

What you’ll learn

1. The Shape of the QuestionUnderstand what kind of question this is — and why the honest answer is an argument rather than a fact.'Why are some countries rich?' has several serious, well-evidenced answers that contradict each other, and the disagreement is not a sign that the field is failing. Because we are trying to explain an outcome produced by centuries of entangled causes, the evidence underdetermines the answer — so this course teaches the arguments, their best evidence, and their limits, without pretending to settle them.
2. The Great DivergenceEstablish the fact that needs explaining — and discover that even the date of it is contested.In 1500 the richest and poorest settled societies differed by something like two- or threefold; today the spread between countries is roughly a hundredfold, so what needs explaining is not poverty but the recent explosion of wealth in a few places. When that divergence began is itself a live dispute between Pomeranz's California School, who date it to the nineteenth century, and Broadberry and others who find European leads centuries earlier.
3. The Geography ArgumentGive the geographic explanation its strongest hearing: that the map dealt profoundly unequal hands long before politics existed.The geographic case, associated with Jared Diamond and Jeffrey Sachs, holds that latitude, disease burden, soil, navigable water, coastline and the local package of domesticable species set the starting conditions for everything built afterwards. It explains genuinely puzzling regularities — the tropics' persistent disadvantage, the landlocked penalty, Eurasia's east–west axis — that no theory of politics predicts.
4. What Geography Cannot ExplainTest geography against the natural experiments that were designed, by accident, to break it.Where a border cuts through identical terrain, climate and history, geography predicts identical outcomes — and repeatedly does not get them. On Maddison's estimates North and South Korea sat at about $753 and $816 per person in 1820 and at roughly $1,569 and $41,321 in 2022, while Haiti and the Dominican Republic, sharing one island, sit at about $1,546 and $17,714.
5. The Institutions ArgumentGive the institutional explanation its strongest hearing — and understand the clever piece of evidence that made it dominant.The institutional case, for which Acemoglu, Johnson and Robinson received the 2024 Nobel Prize in Economic Sciences, holds that prosperity follows from inclusive institutions — secure property rights, constrained executives, broad participation — while extractive institutions enrich a narrow elite and kill the incentive to invest. Their 2001 paper made the case empirically by using early European settler mortality as an instrument for the kind of institutions colonisers built.
6. What Institutions Cannot ExplainTurn the same scepticism on the winning theory — because a course that only stress-tests one side is propaganda.The institutional account faces a regress (where do good institutions come from, if not from geography and history?), a live data dispute over the settler-mortality instrument between Albouy and its authors, and the awkward case of China, which grew about fourfold from 2000 to 2022 without inclusive political institutions. Named critics including Sachs, Subramanian, Diamond, Fukuyama and Easterly press different versions of these objections.
7. Colonialism and ExtractionTake seriously the argument that poverty was not merely failed development but, in significant part, a transfer — and test it as rigorously as the others.Dependency theory and colonial-extraction accounts, associated with Prebisch, Frank and Rodney, argue that poor regions were actively impoverished by being integrated into a world economy on terms set elsewhere. The account is strongest where the extraction is documented — Haiti's indemnity, drawn borders, resource enclaves — and strains against cases like South Korea, which was colonised and is rich, and Ethiopia, which was not and is poor.
8. The Resource Curse and Its CounterexamplesExamine the most counterintuitive claim in the field — that valuable resources can make a country poorer — and see how contested it now is.Sachs and Warner's 1995 finding that resource-rich economies grew more slowly launched the resource-curse literature, with mechanisms including Dutch disease, revenue volatility and the fact that a state funded by a wellhead need not tax or please its citizens. But Norway and Botswana are conspicuous counterexamples, and Haber and Menaldo's 2011 reappraisal found no curse and some evidence of a resource blessing.
9. Culture, and Why It Is the Most Dangerous ArgumentLearn why cultural explanations are so seductive, so hard to test, and so consistently wrong about the future.Cultural explanations have a serious tradition — Weber's Protestant ethic, and modern work on trust and social capital — but a catastrophic track record, because they are easy to construct after the fact and hard to falsify. On Maddison's figures Japan was poorer than Mexico in 1950 and South Korea poorer than Ghana, at a time when authoritative commentators explained those countries' poverty by their cultures — which those same cultures then failed to prevent them escaping.
10. Why It Doesn't ResolveSee why the four explanations are not rivals in a race but layers in a stack — and why that is a finding, not a failure.Every argument in this course, pressed hard enough, hands the question to one of the others: geography shapes institutions, institutions decide what resources do, extraction installs institutions, and culture may be a symptom of all three. The causes compound across centuries rather than competing, which is why no single-factor model predicts well out of sample.
11. What to Do With the ArgumentLeave with the narrow things everyone actually agrees on, and a working method for the next confident explanation you meet.Beneath the disputes there is a real consensus: sustained growth is historically recent, compounding is enormous, both geography and institutions correlate robustly with income, and no single-factor model predicts well out of sample. The practical skill is to ask of any confident explanation what it cannot explain, which direction its arrow runs, and whether it was formed before or after the outcome was known.

Questions this course answers

Grounded in trusted sources

• Maddison Project Database 2023 — Bolt & van Zanden, via Our World in Data (ourworldindata.org/grapher/gdp-per-capita-maddison), constant 2011 international $
• Jared Diamond — 'Guns, Germs, and Steel' (1997)
• Jeffrey Sachs & Andrew Warner — 'Natural Resource Abundance and Economic Growth', NBER Working Paper 5398 (1995)
• Daron Acemoglu, Simon Johnson & James Robinson — 'The Colonial Origins of Comparative Development', American Economic Review (2001)
• Daron Acemoglu & James Robinson — 'Why Nations Fail' (2012)
• David Albouy — 'The Colonial Origins of Comparative Development: An Empirical Investigation: Comment', American Economic Review (2012), and AJR's reply (NBER w16966)
• The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2024 — press release, nobelprize.org
• Kenneth Pomeranz — 'The Great Divergence' (2000); Stephen Broadberry and Jack Goldstone on divergence timing (see Wikipedia — Great Divergence)

Every Wunder lesson is built from real, reputable sources — never invented.

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