The Geographical Imperative

Is geography destiny?

Composite image of Earth’s biosphere. Source: NASA

In 1820 – at the dawn of the Industrial Revolution – per-capita GDP in Western Europe was three times that of Africa. By 1992, it was 13 times as high, despite the catastrophic effects of two world wars on Europe

When you look at a map of global economic development, two significant facts stand out: most tropical countries are poor, and most land-locked countries are poor. Many geographical regions are extremely fertile, despite being both tropical and land-locked. But fertile, productive land hasn’t always led to productive economies.

People have to live somewhere. Where they live affects what they do – and how productive they are. Economic geography can be looked at two ways: the physical attributes of the land itself, and the effects of the land on human productivity – and therefore wealth. The tropics are incredibly productive, biologically. But perhaps they are too productive. The fertile tropics are a breeding ground for human pathogens. It’s hard to be creative or productive when you’re sick.

Source: Gallup, Gavira, and Lora: IADB.

The other important influence of geography on economic growth is its impact on trade. Countries with good harbors and navigable rivers have grown more quickly – and more consistently – than those that are land-locked. In early American history, New York grew more quickly than did Vermont. During the Civil War, it was critical for the Union to secure the Mississippi River so grain from the Midwest could be shipped to global markets.

This doesn’t mean warm, land-locked areas are doomed to poverty. Switzerland is one of the wealthiest nations on Earth, despite being land-locked. But they border several prosperous countries with good ports. And Switzerland specialized in financial services, which don’t depend on the physical shipment of goods for trading. Advances in medicine – and the advent of air-conditioning

By |2019-02-20T13:04:43-04:00May 16th, 2017|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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