Thursday, July 13, 2006

The Key to Increasing GDP? Move Away From the Equator

One thing that I noticed when looking at a map of the world is how the farther you go away from the equator, the better the economies are. You can see it graphically on this map (or check out this slightly different (and huge) map that shows it more clearly).

I was curious how latitude correlated with GDP per capita (calculated via PPP), so I was glad to see this post over at The Audacious Epigone where he calculated it:

Economic transparency/corruption index: .68, Distance from the equator: .67, Births per woman: -.81, Life expectancy: .85
Now I can see why having fewer children, having a longer life expectancy and having less corruption would raise GDP, but being farther away from the equator? I don't intuitively see that. And yet it is correlated almost as strongly as corruption.

I'm not sure exactly why this is. Maybe when it is ungodly hot, people just don't like to work. Or possibly, diseases are worse around the tropics than at other latitudes. Or it could be that the key grains of agriculture: wheat, rice and corn grow better at the higher latitudes. Or maybe, if you are in a tropical area like Hawaii, the idea of sitting on a beach is much more appealing then maximizing wealth. Only when you get to cold areas do you have nothing better to do but build your economy.

Whatever the reason, it makes it that much more impressive that Lee Kwan Yew was able to transform Singapore into a first world nation given how it is so close to the equator.


petesopete said...

Living close to the Ecuator, and in a country with one of the lightest shades of green in the map, I have a few observations to make:
- Most of the countries with lower GDPs, are former colonies (with the exception of the US and Canada). European Imperialism caused many internal conflicts in these countries specially in those that became independent after the 2nd half of the 19th. century.
- Land that is closer to the Ecuator is also more sensible to climate variations and the land covered by tropical forests is poor in nutrients once the trees are torn down (there are a lot of nutrients but they are being used all the time, and deforestation takes them away from the medium).
- More natural disasters.
- Most ex-colonies that have high GDPs had their native populations almost wiped out when Europeans settled, therefore making easier the tropicalizacion of those countries.
- The heat makes you lazy. You can find food anytime of the year with minimal effort.

Eldon Chandra said...

The drivers for Singapore's prosperity were coming from farther away from the equator, China.

It seems to me that Audacious Epigone was also correlating higher average IQ with greater distance from equator. Higher average IQ could logically being correlated with greater GDP. Having more high IQ professionals and scientists/engineers can boost a country's commercial possibilities. There is not being many Microsofts or IBMs in the subsaharan africa.

coleto said...

Try GDP growth - it says the exact opposite.

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