This idea of what leads certain regions to have higher incomes than others is as old a question as it can get. Within this, quality of institutions has emerged as one of the strongest reasons for high and low growth. Within this, the questions remains what leads to better institutions? Many explanations have been given like law, politics, finance and so on.
Joram Mayshar, Omer Moav, Zvika Neeman and Luigi Pascali have this interesting piece looking at geography and agriculture as a source for institutional differences. They build from Jared Diamond’s idea on why geography matters but have a different take.
The authors say that regions that grew things like tuber etc could not really store these agri items. Hence they had to be consumed right away. There was no case for appropriation by robbers and so on.
However, those who grew things like cereals etc which could be stored, there was a case for appropriation by robbers (Hindi Movie fans will remember Sholay :-)). Hence, the need for hierarchy and institutions to minimise these robberies.
That simple really..
One of the most pressing problems of our age is the underdevelopment of countries in which government malfunction seems endemic. Many of these countries are located close to the Equator.1 Acemoglu et al.(2001) point to extractive institutions as the root cause for underdevelopment. Besley and Persson (2014) emphasise the persistent effects of low fiscal capacity in underdeveloped countries. On the other hand, Diamond (1997) argues that it is geographical factors that explain why some regions of the world remain underdeveloped. In particular, he argues that the east-west orientation of Eurasia resulted in greater variety and productivity of cultivable crops, and in larger economic surplus, which facilitated the development of state institutions in this major landmass. Less fortunate regions, including New Guinea and sub-Saharan Africa, were left underdeveloped due to low land productivity.
In a recent paper (Mayshar et al. 2015), we contend that fiscal capacity and viable state institutions are conditioned to a major extent by geography. Thus, like Diamond, we argue that geography matters a great deal. But in contrast to Diamond, and against conventional opinion, we contend that it is not high farming productivity and the availability of food surplus that accounts for the economic success of Eurasia.
- We propose an alternative mechanism by which environmental factors imply the appropriability of crops and thereby the emergence of complex social institutions.
To understand why surplus is neither necessary nor sufficient for the emergence of hierarchy, consider a hypothetical community of farmers who cultivate cassava (a major source of calories in sub-Saharan Africa, and the main crop cultivated in Nigeria), and assume that the annual output is well above subsistence. Cassava is a perennial root that is highly perishable upon harvest. Since this crop rots shortly after harvest, it isn’t stored and it is thus difficult to steal or confiscate. As a result, the assumed available surplus would not facilitate the emergence of a non-food producing elite, and may be expected to lead to a population increase.
Consider now another hypothetical farming community that grows a cereal grain – such as wheat, rice or maize – yet with an annual produce that just meets each family’s subsistence needs, without any surplus. Since the grain has to be harvested within a short period and then stored until the next harvest, a visiting robber or tax collector could readily confiscate part of the stored produce. Such ongoing confiscation may be expected to lead to a downward adjustment in population density, but it will nevertheless facilitate the emergence of non-producing elite, even though there was no surplus.
The initial idea turned on its head..
Fascinating to read all this.
Coming to Sholay, if the villagers had grown tuber instead may be Ramgarh could have been saved. But then some other village may have faced the music. And then we did see some institutional hierarchy developing in form of Thakur who wanted to stop Gabbar (the robber) from taking cereals from the villages. But the overall state institution of police was ineffective. All it did was to keep some reward for catching the robber..