Free trade and geography: the case of the Americas

Jared Diamond tried to explain how the development in the America diverged sine 1500 (original PDF via and archived in Cominganarchy, html here and archived here). Not as revolutionary as "Guns, Germs and Steel". Still a must-read, and definitely better than "Collapse".

There are a few lessons to learn

1) Lee Kuan Yew's theory of air-conditioner is supported
  • Third, before the advent of air-conditioning, machinery in tropical factories hadmore frequent breakdowns, and it now incurs higher air-conditioning costs.
2) "Curse" of natural resources
  • M&D observed the correlation between natural resources and complacency in creating value by oneself.
  • This should serve as a warning to the "NCE" (New Commodity-driven 'Economies'), such as Venezuela, Russia, Ecuador and Shanxi Province in China. Look to Dubai for the role model. Nauru for the anti-model.
3) "Land-locked areas tend to be less developed" supports the free trade argument. Though viewing from today's development in transportation and communication technologies, I would argue that the location factor may represent a slightly lower weight.

4) The factors of economic and political system, "native American population density" (-- see below), and cultural heritage (Anglo-Saxon vs Latin) originated from what M&D called as human institutions. Ultimately it is political and economic system.

+ minor critics
  • Miller & Diamond used maize as an example to demonstrate low agricultural productivity in tropic America. His argument breaks down if paddi rice instead of maize. IMO economic system (and of course the political stability in the background) is a much larger driver. Because, Vietnam, despite its socialist economic system, produce more rice per acre than, say, South Korea. Because rice can be harvested 3 crops in Vietnam vs only 1 crop in Korea. e.g. Rice/cap in China is 186M Tonnes/1316M=0.141 Tonnes/cap; Vietnam has 36/84=0.429 Tonnes/cap
  • I am not sure if I agree with the "native American population" theory. After all, native Americans were both wiped out in North American and the Andes. I guess it is "humn institution" that mattered while the history can brought about such 'insitution' was just a anecdote.
(THe first map is GDP based on PPP, second is based on forex)
I would argue that there is more to the "temperate climate" theory. There is a long winter in temperate climate where human beings do not have to (are prevented from) work the field, hence forcing them to be locked inside a house and think, and innovate. This also explains why civilizations tend to flourish from temperate zone in other civilizations such as North China (instead of South China). The ripple effect is that immigrants from old world prefer to settle in temperate zones in new colonies, whether it is the Americas, or SW Australia, or Southern Africa.

In fact, this is even true for native American civilizations of Aztec and Inca. They are located in high altitude temperate zones. However, it was the geographical remoteness (hindrance to trade) that had kept large scale European immigrants away (and hence trade, technology and 'human institutions').

Therefore, Miller & Diamond's case can be viewed as an academic support for WTO, globalization, and free trade.

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