There is a heated ongoing debate in the field of long term economic development on whether it is geography or ‘institutions’ that has the more important direct effect on current economic performance. However, one area of consensus in this debate is that geography has an indirect effect on economic performance through its influence on the origin of institutions. This consensus provides the motivation for a branch of the literature that seeks the geographic origins of economic institutions in the very long run.
This literature concentrates on the geographic and biogeographic endowments conducive to the onset and diffusion of economic development over the past millennia. Its starting point is the Neolithic revolution (approx. 10,000 B.C.), that is, the transition from hunter-gathering to agriculture and domestication, which led in turn to higher population density, more complex social and economic systems, and the emergence of the state above the tribal level. The conventional explanation for this deep technological and social change maintains that environmental advantages were instrumental in bringing about the increase of agricultural productivity relative to foraging. This, combined with the ability to store food, facilitated population agglomeration and the emergence of a non-food producing elite as well as the creation of rudimentary states to oversee the provision of defense. Although empirical research has found evidence that supports this theory, recent research presents interesting challenges to the received wisdom. A competing theory argues, for example, that the origin of a non-food producing elite and the emergence of more complex social institutions did not depend on the availability of food surplus but was instead a result of the appropriability of cereal crops from farmers.
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