Historical Accidents and Growth

One of the objections to my previous post on charity was that often we don’t know the best way we could be helping people. I still believe that in general people do not seem very concerned about the efficacy of their giving, or at least that it is one among many considerations that go into the decision to give or volunteer. But this still is a valid point – if we are interested in long-term development, we need to come to grips with how little we actually know about why some countries (and regions) are poor and others are rich. There have been many proposals – institutions, religion, natural resources, technology, property rights, geography, immigration patterns, good governance, etc. All of them contain a grain of truth, but none can be said to be a “silver bullet” that is effective regardless of time or place. It is probably most accurate, if not particularly satisfying, to say that development has been a result of a confluence of all of these factors, and many more besides, in addition to unpredictable historical accidents.

I recently came upon one particularly stunning example of this. From around 500-1500 A.D., Europe was the intellectual and economic backwater of the world, about on par with Africa. The three main economies, India, China and the Islamic world had extensive trade ties throughout the Indian Ocean that were more or less peaceful. This all changed near the beginning of the 16th century, when the Portuguese in particular began conducting heavily armed trading missions in the area. They met with little resistance because of two historical accidents: the large Chinese fleet had recently been dispersed due to domestic disputes, and the Europeans had much more advanced cannon technology. Cannons had been introduced into Europe from China (via the Mongolians) around 1300 A.D.; they were able to quickly improve upon the original designs because they were already skilled in a similar process: bell-casting. Between their skill in smelting iron and the constant petty warfare to test out their innovations, Europeans were soon ready to trade and racketeer in the no-longer peaceful Indian Ocean.

Now, it would be a mistake to overplay the importance of any one historical accident. It is a large leap to go from church bells and cannons to European colonialism in the Asian world, and it certainly doesn’t explain why Europe has become so wealthy in the last 500 years while India or Africa has not. But one has to wonder how many of these historical accidents exist, and how important they really are. One thing that is clear, however, is that implementing top-down growth models in the developing world has met with little success. We just don’t know how to separate the causal factors of growth from the effects of it, or how to account for differences by region and culture. This doesn’t mean that we should stop trying; perhaps we are going about it the wrong way. I think that our current methods are too paternalistic – we are telling them what growth is and how we are going to achieve it, drowning out local knowledge and preferences. This is why I believe that we should use our charity to directly empower the people who need it, whether through micro-lending or by supporting charities that come from these communities or have long-term ties with them. This is also one of the reasons why I support more open immigration and trade, although that’s another argument entirely.



~ by danplechaty on January 17, 2010.

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