Geographically disadvantaged countries

Capitalist-led development does not work everywhere. Meddlesome governments and rapid population growth partly explain why some economies have fallen so far behind. But geography, climate and natural resources may play a larger role than has generally been acknowledged. There are many countries which have done most things according to the capitalist gospel yet cannot seem to attract foreign investment.

In sub-Saharan Africa growth was on average 4 percentage points below that of East Asia between 1965 and 1990. Bad government explained perhaps 1.7 percentage points of the difference. But a combination of lean natural resources, poor access to transportation and fragile tropical ecology explained 1 percentage point. Short life expectancy, linked to the incidence of tropical diseases, accounted for 1.3 percentage points. Locational problems were less critical in Latin America, accounting for just six-tenths of a percentage point of the region's 3.9 percentage point differential in growth with East Asia. But geography apparently did play a malevolent role in a handful of countries, notably Bolivia.