Distance from the Equator and proximity to the coast explains the wealth of nations?
A Colombian friend asked me the other day how Chile was. I said “It was strange to be in a Latin American country where they don’t blame the U.S. for whatever ails them. In Chile, instead of bitching about George W., they just quietly go to university, build factories, plant farms, and sell their products worldwide.” She took this as an implication that other Latin Americans were lazy and, instead of working, preferred to complain about the U.S. She said that all of the poverty or wealth of nations can be explained by distance from the Equator (more is better) and distance from the sea coast (closer is better). Bolivia, therefore, is a guaranteed loser. Most of Africa likewise. What is it about the Equator that is so deadly for economic development in her view? Tropical diseases and a difficult growing climate.
How do we like this theory compared to the alternatives? Alternative 1 is my personal theory, which is that wealth comes from investment and that countries with stable governments and efficient courts are the ones where people feel comfortable investing [this has some troubling implications for the U.S. because corporate managers are taking most of the profits from public corporations home as salary, thereby reducing the amount of capital available to invest and decreasing investor confidence]. Alternative 2 is Jared Diamond’s, put forward in his book Guns, Germs and Steel. Diamond claims that economic development only works well in continents that are oriented east-west like Eurasia. This way an agricultural technique that is invented in one place can be spread throughout the continent. North-south oriented continents such as Africa don’t have this advantage because a technique that works in the plains of South Africa won’t work in the central jungle or northern desert. The lack of development of North America, which is oriented east-west, is explained by the fact that humans came here suddenly and wiped out all the animals that might otherwise have been domesticated.

