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Geographical Effects on GDP per capital

Updated: Feb 10, 2019



Many countries with similar locations in the world have vastly different economies. For example, Egypt borders Saudi Arabia, but Saudi Arabia’s GDP per capita is over ten times higher; Germany borders Poland, but Germany’s GDP per capita is 3.2 times higher than Poland. I suspect that these discrepancies are the result of geographical differences between countries, so I will be comparing GDP per capita with three variables: average temperature, miles of coastline, and latitude. For each variable, I will sample fifteen countries.



As shown in the graph, there is no clear correlation between GDP per capita and miles of coastline. My hypothesis explaining this is the fact that coastlines are not always useful in exporting goods, as they may freeze in the winter. Since exports are linked to GDP per capita, then that means that coastline length itself cannot be a factor.


r ≈ 0.12616; x-axis is GDP per capita, y-axis is miles of coastline; y = 7362.928174 + 0.19744518x

There does not seem to be a strong correlation between GDP per capita and coastline, as shown by the correlation coefficient of only ~0.126. Using the line of best fit, the length of Italy’s coastline can be estimated from its GDP per capita.


According to the equation, Italy’s coastline should be about 13,350 miles long (based on Italy’s GDP per capita of US$31,952.88; taken in 2017). However, Italy’s true coastline is 4,385 miles long. Using this isolated example (and some inductive reasoning), I can infer that GDP per capita is not affected much by length of coastline.





r ≈ 0.65126; x-axis is GDP per capita, y-axis is latitude; y = 8.278265275 + 0.0008440976x

The graph shows a strong correlation between latitude and GDP per capita. Again, we can use the line of best fit to estimate latitude. Plugging Italy’s GDP per capita of US$31,952.98 (2017), we get a latitude of about 35° N一which is not far from Italy’s true latitude of 42° N. Iceland’s GDP per capita is US$70,056.87 (2017), which when plugged into the equation, gives a latitude of about 67.4° N; Iceland’s true latitude is 65° N. Because the equation predicts the latitude of countries so accurately, I can conclude that latitude affects GDP per capita.





There seems to be a relatively strong negative correlation between GDP per capita and average national temperature. Using Italy’s GDP per capita of US$31,952.98 (2017), we get an average temperature of 10.54°C. Italy’s true average temperature is 13.45°C, which shows that GDP per capita is mildly influenced by average temperature—not as much as latitude, but more than coastline is.


Conclusions


Countries that are close to the North pole seem to have higher per capita income—which is strange, since agriculture and exporting goods are essentially impossible at those latitudes. My ideas are: the area (as in countries located at northern latitudes) seems to generally adopt a capitalist-socialist mixed economy; the area’s general involvement in the EEZ; and the area’s general monopoly on fishing. On the flip side, tropical countries have lower GDP per capitas. I have two explanations for this:


1) Tropical countries have more diseases (malaria, dengue, West Nile virus), which hurts economic growth by YLL.


2)Tropical countries were more likely to be colonized by Europeans, hurting future economic development.


To summarize: Countries’ GDP per capita is relatively independent of length of coastline, a high latitude increases GDP per capita, and a higher average temperature generally means a lower GDP per capita. There are still other variables that may affect GDP per capita, such as amount of arable land, amount of rainfall, average elevation, and total length of all rivers in a country. I may write a follow up which will explore some more variables.


Sources:

https://www.cia.gov/library/publications/the-world-factbook/

https://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&met_y=ny_gdp_pcap_cd&hl=en&dl=en

http://www.cru.uea.ac.uk/

scatter plots made with: http://www.alcula.com/calculators/statistics/scatter-plot/

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