Endowments, culture, and economic development

This paper attempts to investigate the contribution of the geographic characteristics of a country in shaping the cultural aspects of its people that are conducive to economic development. In other words, the paper attempts to address the question of whether the geographic endowments can explain cross country variations in economic development through their ability to explain cross country variations in cultural traits that enhances economic development. Towards that end, the paper attempts to determine whether the geographic endowment has a significant effect on a nation's culture, which geographic characteristics are significant in explaining certain cultural values, and whether geography can have an impact on economic development through its effect on these cultural aspects.

The regression results show that the geographic characteristics of elevation and terrain ruggedness seem to explain cross country variation in cultural attributes of trust in people of another nationality and of trust in people of another religion, in addition to tolerance and respect for others. The proximity to the coast seems to explain cross country variation in the quality of hard work and independence. The latitude, being in the geographic tropics, and the temperate and tropical climatic zones seem to explain cross country variation in trust in most people, besides the qualities of responsibility and obedience. Finally, the quality of thrift is explained by latitude. The land area, the distance to the nearest inland navigable river, the fertility of the soil and the percentage of land that is desert seem to be geographic characteristics that do not explain these cultural attributes. The paper also conducts a two stage least squares where the second stage is a regression of the logarithm of real Gross Domestic Product per capita on each of the cultural attributes that are considered in this study: trust, tolerance, determination, responsibility, hard work, obedience, thrift and independence. In the first stage, the geographic factors that statistically explain each of these cultural aspects are used as instrumental variables. The results of the empirical estimation show that the cultural variables, instrumented by the geographic variables, explain cross country variation in economic development.