Nathan Nunn: belief

Transcript context

…When it comes to your relative optimism for the southern parts of Africa, how much do you worry about what we call the gravity equation in trade theory? They’re just too far from most other places. Most other countries don’t care strategically very much about them. Perhaps apart from a few minerals, they won’t have nearly as much trade. South Africa in particular has been deindustrializing. What’s their engine of growth, given their trade possibilities seem to be more limited? Is the gravity equation pretty powerful predictively, yes? Yeah, the gravity equation is very, very powerful. One thing to keep in mind is, with the gravity equation, there are traditional variables that are in there, which are distance. But then there’s been a lot of work actually extending this and putting other bilateral variables in there as well — for example, common language, common religion. If we think of South Africa, obviously, having common language with European countries is going to be important. English, for example, and then common religion. The most controversial is the work by Spolaore and Wacziarg where genetic distance is a super strong predictor of basically bilateral income differences and trade. And so again, these former settler colonies — South Africa, for example — are going to have a leg up in the gravity equation for exactly that reason if one buys the genetic distance story. And so it is — What’s your view of that story?…

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