Econometric exercises in cross country data are always interesting but have to be taken with a pinch of salt. There is only to a limited extent that we can control for country specific factors and differences to glean some insight on broad world level patterns.
Recently, I came across one such interesting exercise by Comin, Easterly and Gong (2010) . These authors ask an interesting question- was wealth of nations determined in 1000 BC? In other words are the inter country differences in development a result of historical (ancient) differences of some sort?
Technological improvement and adoption are one of the important determinants of nation’s growth and development. Hence, these authors ask if the historical differences in technological adoption determine the world distribution of growth levels today. It is certainly an ambitious exercise given that it starts with data from 1000BC and has to control for the massive human migrations that have happened over such long period of time. With all the caveats in place, the conclusion is definitely interesting. It is not the level of technological adoption in 1000BC that determines today’s inter-country differences but the level in 1500 AD.
According to the to the measures used in the paper, China always was a leader in technological adoption since 1000BC to 1500AD. India and Western Europe were lagging behind equally around 1000BC, seemed to have caught up around 0 AD and then Western Europe surpasses all the civilizations in 1500 AD. Currently Western Europe seems to be far ahead of China and India and this somewhat corresponds closely to the differences between these civilizations in 1500 AD than earlier periods. The regressions and robustness analysis confirm this interpretation.
There are variety of limitations one could think about while critiquing such exercise. One is that the historical data is not accurate and is subject to frequent revisions. More research has been done on the Western Europe’s history than any other place in the world and hence there is an inherent eurocentric bias in all such data analysis and narratives. However, in spite of these limitations the analysis in this paper is pertinent and paves the way for further research in historical determinants of development today. It also widens the set of questions asked about inter-country differences in development to those beyond the differences in geography and institutions . In doing so, it definitely underscores the importance of history’s importance in current outcomes.