Climate, Technology, and the Evolutionof Political and Economic Institutions

Stephen HaberStanford University

CES-IFOUniversity of Munich

June 2013

The Puzzle

Why are some countries characterized by enduringdemocracy, while other countries arecharacterized by persistent autocracy?

There is broad agreement that democracy iscorrelated with high per capita GDP and lowlevels of income inequality.

But the evidence suggests that some underlyingprocess jointly determined GDP/c, incomedistribution, and democracy.

Finding 1:There is a non-linear relationship between the level of

rainfall and the level of democracy across the 20th century

This finding is robust to including newcountries created after World War I

It is also robust to including countries thatonly came into existence after thedecolonization wave of the 1960s

This finding is also consistent with the naturalexperiment created by the dissolution of the USSR

The pattern holds even if we just lookat the heyday of European Fascism

Two steps in exploring themechanism

1. Specify a theory from first principles2. Test that theory against: Cross-country regressions A series of natural experiments A series of historical comparisons Studying the characteristics of outliers

What other outcome, directly related to rainfall,displays similar discontinuities at 540 and 1200mm?

Implication: there is a positive relationshipbetween soils suited for rainfed cereals

and the level of democracy

An even starker way of seeing the pattern

The cereals-democracy finding is robustto possible exogenous confounders!"#$%&'

&!(%&)#*$*+,&+-&./-0&1"*23%4&5%/%"$6&"24&)7%/"8%&9-$*+,&':;<=>?'?

!"#$%&'()*(++$",+-&'"#.+%&/%0,10*1&2**"*+&$,&30*(,%4(+(+ &

/5(6&7 /5(6&8 /5(6&9 /5(6&: /5(6&;

& 3"<$%=&>?) 3"<$%=&>?) 3"<$%=&>?) 3"<$%=&>?) 3"<$%=&>?)

>?)&/"$<&/.$%0#$<$%= ?@:?AAA ?@B:AA ?@;>AA ?@B:AA ?@C>AA

D?@>BE D?@>>E D?@>;E D?@><E D?@>BE

@.AA=&B(+%(*,&2.*"5( C;DEFFF

GHD9IJ

K0<0*$0&26"<")= L7D8HFFF

GED8IJ

>?)&M*.1(&N$<&3M LEDEE97FFF

&&&G'(+".*6(&M.*+(J GEDEEEIJ

O*$%$+4&M"<",= ED;P

GHDH8J

@.%64&M"<",= L7:DHF

GCD8:J

O(<)$0,&M"<",= L8HDEFFF

GHD8HJ

Q*(,64&M"<",= L8HDEFFF

GCD;;J

/50,$+4&M"<",= 79D7

GHDH7J

3"*%.).(+(&M"<",= L7IDI

G7EDIJ

M",+%0,% :9D8FFF 9PDEFFF ;7DHFFF :ID:FFF :ID:FFF

G:DC:J G:DE;J G;DH7J G:D:HJ GHD88J

+$)A0

M",+%0,% 99DEFFF 8HD9FFF 97DHFFF 97DPFFF 9EDEFFF

G7DPIJ G7DC;J G7DPHJ G7DP9J G7DPEJ

N#+(*?0%$",+ 79I 79I 79H 79I 79I

3+(.1"&'L+R.0*(1 EDEEP EDE;H EDE7H EDE7H EDE8I

& &F&5SEDE;-&FF5SEDE7-&FFF5SEDEEE7

What is it about rainfedtemperate crops and democracy?Biological characteristics of rainfed temperate crops, plus

modern technologies of production of those cropsmeant that economic agents in temperate zones werelikely to solve problems of scarcity through trade.

Economic agents in temperate zones therefore had greaterincentives to trade, specialize (invest in human capital),and erect institutions that protected property rights.

Societies in temperate zones were more likely to go down ahistorical path of institutional development that resultedin a high level and broad distribution of human capital,and that gave rise to institutions that limited the state.

Democracies were more likely to emerge and survive inthose “high transaction” societies.

There are fundamental biological differences betweentemperate crops and tropical crops. The former tend to

be highly storable, the latter tend to decay quickly.

Production shocks tend to beidiosyncratic, not systemic, in the

production of rainfed temperate cropsRainfed temperate crops can fail in one

locality, but succeed in an adjoining locality,because of minor variations in the weather

Irrigated crops tend to be subject toaggregate, not idiosyncratic shocks

Tropical crops tend to be subject to aggregateshocks.

Early modern and modern technologies for producingrainfed temperate crops allow them to be grown atsmall scales of production--less so for tropical crops

Access to water is not a barrier to entry in theproduction of rainfed temperate crops

As compared toirrigatedcrops grownin deserts(whoevercontrols thewater cansiphon off thesurplus)

Moderate rainfall agriculture gives riseto transactional societies, conducive to

democracy

Imagine a group of farmers,producing under rain-fed conditions

There is a set of possible transactionsthat would allow them to mitigateidiosyncratic production shocks

But those transactions require an entitythat can facilitate transactions (enforce

contracts and property rights)

Those institutions create incentivesto specialize (and develop human

capital to do so)

This is a dynamic process characterized by increasingreturns: a state the facilitates transactions creates incentives

for trade and specialization, which creates incentives forhuman capital investment, which furthers the institutions that

support transactions…

Irrigation-dependence gives rise to insuranceStates, democracy is less likely to endure

The threat of scarcity is not solved throughtransactions among equals, but by a taxation-

insurance relationship with a monopsonist state

Prior to modern technologies of storageand transport high rainfall gave rise to

stateless societies

The stateless society of independentfarmers producing a non-storable crop

Modern technologies of transportation gave rise tovertically integrated states; democracy not likely to endure

What happens when the plantationcomplex of the modern world

backward integrates into politics?

Testable ImplicationsThere should be a relationship between soils suited for rainfed

cereals and the level and distribution of human capital in thepast.

There should be a relationship between human capital in the pastand democracy measured today.

There should be a relationship between soils suited for rainfedcereals and institutions that protect contract and property rightsmeasured in the past.

There should be a relationship between institutions that protectcontracts and property rights measured in the past and thedemocracy measured today.

There should a relationship between soils suited for rainfed cerealsand the density of local and regional trade in the past.

There should be a relationship between the density of local andregional trade in the past and democracy measured today.

We do observe the predicted relationship betweensoils suitable for growing rainfed temperate crops and

human capital (measured a century ago)

We also observe a relationship betweenhuman capital (measured a century ago) and

average polity in recent decades

Some econometric evidence!"#$%&'(')*$)+$,-+.$/0'12#3$4#-#0(5$013$%6#-07#$8+(')*9$:;<=>?@:@

!"#$%&'()*(++$",+-&'"#.+%&/%0,10*1&2**"*+&$,&30*(,%4(+(+

/5(6&7 /5(6&8 /5(6&9 /5(6&:

3";$%<&=>) 3";$%<&=>) 3";$%<&=>) 3";$%<&=>)

=>)&/"$;&/.$%0#$;$%< ?@ABCCC ?@D? ?@9A E?@?8D

F?@8GH F?@9?H F@?9?H F?@89H

I4$55;(&7G7? >@A:=BB >@A:?BB

C@A@DEF C@A@DGF

2%4,$6&J*06 E8G@?CCC

F77@?H

=>)&K(0*+&/64"";$,)&F7GD?H ::A:BBB

C:AG@F

L",+%0,% :A@MCCC AB@8CCC MA@?CCC 98@7CCC

FD@BGH F77@MH F79@7H F:@9AH

/$)N0&L",+%0,% 9:@8CCC 98@MCCC 98@7 8D@8CCC

F8@9DH F8@88H F8@88H F7@AAH

O#+(*>0%$",+ 77D 77D 77D 787

3+(.1"&'E+P.0*(1 ?@??G ?@?7A ?@?AG

C&5Q?@?D-&CC5Q?@?7-&CCC5Q?@???7

2,1")(,".+&R(1$0%"*+

Going beyond regressions:Natural Experiments

1. The dissolution of the USSR2. Santa Fe, Argentina3. The Australian Penal Colony4. The Maryland Colony5. The English Caribbean6. The Hawaiian Republic (and Bayonet

Constitution of 1887)

Going Beyond Regressions 2:Comparative History

What were the conditions that sustainedthe democracies of antiquity (in Greeceand Rome), as compared to theconditions that sustained theautocracies of Mesopotamia, Egypt,and the Persian Empire?

The Greek Democracies and the Roman Republicwere built upon societies of grain growing farmers

Going Beyond Regressions 3:Learning from Outliers

Who are the democratic outliers in the soil suitability data series?1. Costa Rica (cereal SI=4)2. Colombia (cereal SI=6)3. Norway (cereal SI=6)4. Trinidad (cereal SI=6)5. Jamaica (cereal SI=9)6. Switzerland (cereal SI=10)7. Finland (cereal SI=10)Three of the four tropical outliers are coffee producers--and coffee

is highly storable and can be grown on small farmsTwo of the four tropical outliers (Trinidad and Colombia) are major

oil producers (along with one of the three European outliers,Norway)