Jul 15, 2010

Was the world distribution of income determined in 1500?

Jared Diamond, in his groundbreaking book Guns, germs, and steel, argues that the world distribution of income across countries today was determined before 1500. Hence, his analysis on the causes of such disparities focuses on geographic causes of technology adoption. But was it really set in 1500?

A paper by Diego Comin, Erick Gong, and Bill Easterly was just published in the AEJ Macro. They collected crude but informative data on the state of technology in various parts of the world in 1000 BC, 0 AD, and 1500 AD.1500 AD technology is a particularly powerful predictor of per capita income today. 78 percent of the difference in income today between sub-Saharan Africa and Western Europe is explained by technology differences that already existed in 1500 AD – even BEFORE the slave trade and colonialism.

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