Today’s rich countries tend to be in East Asia, Northern and Western Europe — or are heavily populated by people who came from those two regions:
The major exceptions are oil-rich countries. East Asia and Northwest Europe are precisely the areas of the world that made the biggest technological advances over the past few hundred years. These two regions experienced “civilization,” an ill-defined but unmistakable combination of urban living, elite prosperity, literary culture, and sophisticated technology. Civilization doesn’t mean kindness, it doesn’t mean respect for modern human rights: It means the frontier of human artistic and technological achievement. And over the extremely long run, a good predictor of your nation’s current economic behavior is your nation’s ancestors’ past behavior. Exceptions exist, but so does the rule.
Recently, a small group of economists have found more systematic evidence on how the past predicts the present. Overall, they find that where your nation’s citizens come from matters a lot. From “How deep are the roots of economic development?” published in the prestigious Journal of Economic Literature:
A growing body of new empirical work focuses on the measurement and estimation of the effects of historical variables on contemporary income by explicitly taking into account the ancestral composition of current populations. The evidence suggests that economic development is affected by traits that have been transmitted across generations over the very long run.
From “Was the Wealth of Nations determined in 1000 B.C.?” (coauthored by the legendary William Easterly):
[W]e are measuring the association of the place’s technology today with the technology in 1500 AD of the places from where the ancestors of the current population came from…[W]e strongly confirm…that history of peoples matters more than history of places.
And finally, from “Post-1500 Population Flows and the Economic Determinants of Economic Growth and Inequality,” published in Harvard’s Quarterly Journal of Economics:
The positive effect of ancestry-adjusted early development on current income is robust…The most likely explanation for this finding is that people whose ancestors were living in countries that developed earlier (in the sense of implementing agriculture or creating organized states) brought with them some advantage—such as human capital, knowledge, culture, or institutions—that raises the level of income today.
To sum up some of the key findings of this new empirical literature: There are three major long-run predictors of a nation’s current prosperity, which combine to make up a nation’s SAT score:
S: How long ago the nation’s ancestors lived under an organized state.
A: How long ago the nation’s ancestors began to use Neolithic agriculture techniques.
T: How much of the world’s available technology the nation’s ancestors were using in 1000 B.C., 0 B.C., or 1500 A.D.
When estimating each nation’s current SAT score, it’s important to adjust for migration: Indeed, all three of these papers do some version of that. For instance, without adjusting for migration, Australia has quite a low ancestral technology score: Aboriginal Australians used little of the world’s cutting edge technology in 1500 A.D. But since Australia is now overwhelmingly populated by the descendants of British migrants, Australia’s migration-adjusted technology score is currently quite high.
On average, nations with high migration-adjusted SAT scores are vastly richer than nations with lower SAT scores: Countries in the top 10% of migration-adjusted technology (T) in 1500 are typically at least 10 times richer than countries in the bottom 10%. If instead you mistakenly tried to predict a country’s income today based on who lived there in 1500, the relationship would only be about one-third that size. The migration adjustment matters crucially: Whether in the New World, across Southeast Asia, or in Southern Africa, one can do a better job predicting today’s prosperity when you keep track of who moved where. It looks like at least in the distant past, migrants shaped today’s prosperity.