The Deep Determinants of Health and Education: Institutions versus Geography

Why are some countries so underdeveloped in economic terms relative to others? This is the central question of a widely cited literature within economics, which has become known as the deep-determinants literature. Within this literature, proximate determinants of development are defined as those that appear in the aggregate production function, such as physical and human capital per worker. Deep determinants, by contrast, are the variables that explain differences in the proximate determinants; hence they are the underlying, or deep, determinants of development. Frequently cited papers in this literature include Hall and Jones (1999), Acemoglu et al. (2001, 2002, 2003), Easterly and Levine (2003), Rodrik et al. (2004), Sachs (2003), and Olsson and Hibbs (2005).1 Many of these papers have attempted to answer the question as to whether geography or institutions is the key deep determinant of economic development. The earlier contributions to the debate tended to conclude that institutions ‘trump’ geography as the key deep determinant of economic development, but the papers by Sachs (2003) and Olsson and Hibbs (2005) suggest there is an important role for geography. This literature is reviewed in more detail by Owen and Weatherston (2007) in this book.