Litina, Anastasia (2013) Unfavorable land endowment, cooperation, and reversal of fortune. Working Paper. Coventry, UK: Department of Economics, University of Warwick. CAGE Online Working Paper Series, Volume 2013 (Number 114).

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Abstract

This research advances the hypothesis that reversal of fortunes in the process of economic development can be traced to the effect of natural land productivity on the desirable level of cooperation in the agricultural sector. In early stages of development, unfavorable land
endowment enhanced the economic incentive for cooperation in the creation of agricultural infrastructure that could mitigate the adverse effect of the natural environment.
Nevertheless, despite the beneficial effects of cooperation on the intensive margin of agriculture,
low land productivity countries lagged behind during the agricultural stage of development. However, as cooperation, and its persistent effect on social capital, have become increasingly important in the process of industrialization, the transition from agriculture to industry among unfavorable land endowment economies was expedited, permitting those economies that lagged behind in the agricultural stage of development,
to overtake the high land productivity economies in the industrial stage of development.
Exploiting exogenous sources of variations in land productivity across countries the research
further explores the testable predictions of the theory. It establishes that: (i) reversal of fortunes in the process of development can be traced to variation in natural
land productivity across countries. Economies characterized by favorable land endowment
dominated the world economy in the agricultural stage of development but were overtaken in the process of industrialization; (ii) lower level of land productivity in the
past is associated with higher levels of contemporary social capital; (iii) cooperation, as reflected by agricultural infrastructure, emerged primarily in places were land was not highly productive and collective action could have diminished the adverse e¤ects of the environment and enhance agricultural output.

Item Type:	Working or Discussion Paper (Working Paper)
Alternative Title:	Unfavourable land endowment, cooperation, and reversal of fortune
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HD Industries. Land use. Labor
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Industrialization -- Economic aspects, Industrialization -- Social aspects , Economic development, Land use -- Economic aspects, Cooperation
Series Name:	CAGE Online Working Paper Series
Publisher:	Department of Economics, University of Warwick
Place of Publication:	Coventry, UK
Official Date:	2013
Dates:	Date Event 2013 Published
Volume:	Volume 2013
Number:	Number 114
Number of Pages:	38
Status:	Not Peer Reviewed
Publication Status:	Published
Access rights to Published version:	Open Access

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