| Abstract: | Some recent empirical studies deny any direct effect of geographyon development and conclude that institutions dominate all otherpotential determinants of development. An alternative view emphasizesthat geographic factors such as disease ecology, as proxiedby the prevalence of malaria, may have a large negative effecton income, independent of the quality of a country’s institutions.For instance, pandemic malaria may create a large economic burdenbeyond medical costs and forgone earnings by affecting householdbehavior and such macroeconomic variables as international investmentand trade. After controlling for institutional quality, malariaprevalence is found to cause quantitatively important negativeeffects on income. The robustness of this finding is checkedby employing alternative instrumental variables, tests of overidentificationrestrictions, and tests of the validity of the point estimatesand standard errors in the presence of weak instruments. Thebaseline findings appear to be robust to using alternative specifications,instrumentations, and samples. The reported estimates suggestthat good institutions may be necessary but not sufficient forgenerating a persistent process of successful economic development. |
