2
The prosperity of nations varies enormously. Per capita incomes in countries within the top
decile of the present day international distribution run about thirty times higher than incomes
falling within the bottom decile. At the extremities differences in national economic prosperity
exceed a factor of one hundred
1
. What explains such large dispersion of the wealth and
poverty of nations?
Traditional economic theory points to accumulation of human and physical capital and
to successful adoption of state-of-the-art technologies as the main sources of variation in
economic productivity
2
. In recent years, however, economists have begun to appreciate more
fully the importance of more fundamental, institutional sources of growth and development.
Capital accumulation and technology absorption are now commonly viewed as intermediate
variables that are affected decisively by institutional arrangements supporting the smooth
functioning of markets; especially honest and efficient government based on the rule of law
and promoting impartial enforcement of contracts, security of property and related practices
safeguarding private returns to entrepreneurship, innovation, investment and hard work
3
.
Empirical investigations applying standard statistical methods to cross-national data have
established strong connections between such political-institutional conditions and economic
performance
4-8
.
In this article we demonstrate the importance of yet deeper sources of contemporary
prosperity: biogeographic initial conditions in place some twelve thousand years ago. The
model and empirical analyses reported ahead are broadly consistent with the sweeping
framework for explaining world socio-economic and political history laid out by Jared
Diamond
9
. Diamond argues that the enormous size of the Eurasian continent, its large
Mediterranean zone in the western part and the East-West orientation of its major axis, meant
that Eurasia was more favourably endowed in pre-history than other regions with nutritious
plants suited to cultivation, animals suited to domestication, and natural corridors of transit
and communication facilitating circulation of goods, people, species and ideas. Because of
these geographic and biogeographic advantages, Neolithic transitions from hunting and
gathering to horticulture and animal husbandry occurred earlier in Eurasia than anywhere else.
The superior agricultural mode of production made possible the establishment of a non-
Convention