Far-Flung Europe: What is the Economic Impact of Geography? John Luke Gallup

My Path to Geography ● Why are LDCs poor and often slow growing? ● Geographically isolated ● Tropical climate

The Outermost Regions

My Path to Geography ● Why are LDCs poor and often slow growing? ● Geographically isolated ● Tropical climate ● Outermost Regions ● Geographically isolated ● Tropical climate (for French regions) ● European institutions and investment

Cross-Country Evidence ● Geographical isolation  Access to sea-born trade  Not distance per se ● Tropical Climate  Disease, especially malaria  Low agricultural productivity, especially for staples

Robust Correlates of Growth

Tropical problems? ● Not agriculture ● Outermost regions are not growing staples ● All have volcanic soils except French Guiana ● Agriculture <= 4% of output (except for Azores, 10%) ● Health ● Not substantial mortality and morbidity due to tropical disease ● All malaria-free except for French Guiana ● There is no geography problem to explain for the economies of Outermost Regions

Issues for the Outermost Regions ● Health ● Manufacturing ● Education ● Unemployment

Manufacturing ● Depressed by transportation costs  Manufacturing is about 15% of national output  It is less than half that level in Outermost Regions  A very small part of economy

Comparative Advantage ● Tourism ● Services tied to networks beyond regions  Capture benefits of globalization  Depends on ● Participation in networks ● Education levels

Education in Outermost Regions ● Highschool dropout rates  Worst (or close to) of all regions of countries  Guadeloupe is exception: at national average  French Guiana and Azores are each worst in country by large margin ● Enrollment of 17 y.o.'s 10% lower than any other region