GDP Density

[phk]

A paper by John Gallup, Jeffrey Sachs and Andrew Mellinger in the International Regional Science Review in 1999 introduced the concept of "GDP density", calculated by multiplying GDP per capita by the number of people per square kilometer. Basically GDP density is a measure of the total amount of economic activity that takes place at different spots on our globe. I found the map they produced quite fascinating:

($/time)/(people)*(people)/(kilometers^2) = ($/time)/(kilometers^2)



Not surprisingly, it looks a whole lot like those satellite pictures of the earth at night



That correlation suggested to the authors that something about the institutions that accompanied colonization, such as laws protecting property rights and promoting capital markets, gave these islands an edge in economic development. On the other hand, another natural hypothesis is that those islands that were colonized first had the richest resources, and it is that inherently more favorable endowment that continues to help them today.

To try to resolve this fundamental ambiguity, the authors claimed to be able to explain the date of initial colonization in part by the magnitude of the prevailing winds. Their argument is that, before the 20th century, the most important determinant of whether a ship was likely to pass by or discover a given island was the strength of the east-west winds at that location. The empirical observation is that the stronger the wind, the longer the island was likely to spend as a colony:



They therefore formed a prediction of how long a given island might have spent as a colony solely on the basis of the prevailing wind velocity, and then looked at the correlation between that prediction and the current GDP per capita. The argument is that, by using this first-stage prediction, one has isolated a statistical component of the time spent as a colony that is uncorrelated with factors that could otherwise be contributing to current GDP. They found a positive correlation, suggesting that institutions may indeed make a measurable contribution to current GDP.

Unfortunately, a critic could always object that, just as a strong wind may have helped determine when the first ship hit land, it would also have an influence on when the second ship arrived, and the third, so that it likely played a formative role in all sorts of important details such as the development of trade networks and accumulation of capital. This capital base may have provided a permanent benefit, which could perhaps be more important than anything about the current legal framework or institutions in determining GDP.

For that matter, a similar issue might account for the correlations between GDP density, ports, and climate. Perhaps the latter factors were important historically, causing physical and network capital to accumulate in certain locales, which remain prosperous today because of that capital rather than because of the ports or climate.

[memphis]

Axis Powers looking pretty sexy on that map.

[2952-0-0]

Interesting. But the map should reflect the differences in economic conditions within countries as well. All the booming economies have prosperous cities and destitute countrysides, so it's not right to treat countries as one giant lump.

[memphis]

I'm also impressed how well Siberia is doing considering how few people live there. Must be all the natural resources to be plundered in the Great North.

[2952-0-0]

I'm also impressed how well Siberia is doing considering how few people live there. Must be all the natural resources to be plundered in the Great North.

No it isn't. It's the same shade of yellow/orange as much of Central Africa or Tibet.

As I stated before, this map is flawed. In many countries, glitzy, world class cities coexist with Medieval countryside where villagers are virtual serfs. you can't treat entire countries as one block.

[memphis]

I'm also impressed how well Siberia is doing considering how few people live there. Must be all the natural resources to be plundered in the Great North.

No it isn't. It's the same shade of yellow/orange as much of Central Africa or Tibet.

As I stated before, this map is flawed. In many countries, glitzy, world class cities coexist with Medieval countryside where villagers are virtual serfs. you can't treat entire countries as one block.

1. There are a lot more people/km^2 in Central Africa
2. Tibet is the lightest shade
3. Countries are not uniformly shaded. The US has all colors in various regions.

[2952-0-0]

1. There are a lot more people/km^2 in Central Africa
2. Tibet is the lightest shade
3. Countries are not uniformly shaded. The US has all colors in various regions.

1. The African jungle/Serengeti are not densely populated. Besides, spend five minutes in an average Siberian village and it's immediately obvious this is nor a wealthy place.
2. Both Tibet and Siberia are desperately poor and sparse locales. One is better than the other, but not by much.
3. The map is running on the assumption that GDP Per Capita is uniform within the borders of a country, when this is definitely not the case. Suppose that a given country has a per capita GDP of $15000, with a rich half of $20000 and a poor half of $10000. Suppose that the country's population is evenly distributed. Under the given map, the whole country will be given a single shade, which is factually incorrect. In China, Shanghai's Per Capita GDP is 7.56 times that of Guizhou (the poorest province). This map is assuming that everyone in China/India/Russia/etc has an equal GDP per capita, which cannot be further than the truth.