Romain Wacziarg


Study provides new perspective on technology adoption

Why are some countries rich and others poor? Much has been written on this question from a historical perspective, says UCLA Anderson Associate Professor Romain Wacziarg. "Countries that were colonized and populated by Europeans are generally more economically developed than countries that were not colonized, or were colonized but not populated by Europeans," he says.

Wacziarg thought this might have to do with the links between developed countries and Northwestern Europe, where the Industrial Revolution originated. "In particular," he says, "with the fact that the colonizers who settled in these regions had been close to the industrial breakthroughs of the eighteenth and nineteenth centuries."

So Wacziarg and Enrico Spolaore of Tufts University began looking at the long term determinants of economic performance by countries -- measured by per-capita income. The main hypothesis of their study was that, if a country has a significant population that is genetically related to the population in the country where a major technological innovation took place, the country is more likely to adopt this technology and develop economically. The results are presented in a paper by Wacziarg and Spolaore entitled, "The Diffusion of Development."

"The idea is not about being European per se," says Wacziarg. "It's about being close to the source of innovation. Not just geographically close, but also genetically close. New Zealand and Australia are not geographically close to Europe, but they still got the industrial revolution sooner than Papua New Guinea in part because they were colonized by Europeans."

Genetic distance measures the time since two populations had common ancestors. Much like siblings are more closely related than cousins since they share parents rather than grandparents, if two populations split apart 2,000 years ago, they will be genetically closer than two populations that split apart 10,000 years ago.

The mechanism linking genetic distance to income differences can take a variety of forms. People who are genetically close are more likely to trust each other. Populations that are genetically close can also communicate more easily, understand each others' cultural norms and values, and adopt practices conducive to modern development -- such as rapid human capital accumulation, low fertility and better political institutions.

One unique thing about this study is the notion that traits that account for differences across populations are transmitted vertically, from generation to generation, more easily than horizontally from one population to another. Because of this, separation between populations is associated with a host of differences in skills, culture and language that are potential barriers to development.

"We needed a way to measure the distance between populations of different countries," says Wacziarg. It turned out that geneticists have identified genetic markers that enable them to distinguish populations. And since these markers evolve at a steady rate, it is possible to determine the length of time since two populations had a common ancestor. It's like a molecular clock, he says.

Genetic distance is based on blood samples. Enzymes and protein markers vary from one population to another. The measure of genetic distance is known as FST Genetic Distance. "It's what geneticists call the measure of heterozygosity, which summarizes how different your genes are," says Wacziarg.

In the study, Wacziarg and Spolaore found that genetic distance is significantly correlated with current per-capita income differences between countries, even controlling statistically for geographic distance and other differences such as climate and resources. The results hold for income differences measured around the world since the year 1500. Interestingly, genetic distance correlates with the current differences in income among European countries despite their close geographic proximity.

"It's really quite simple," says Wacziarg. "The more genetically related people are, the more they will communicate, trust each other, imitate each other and share ideas. Closely related populations will exchange practices, values, and modes of production that are conducive to economic development."

"What the paper does not argue," says Wacziarg, "is that a country will never develop if it is really far from the technological frontier. It ultimately might get it, but the time it will take is proportional to its genetic distance from the source of innovation."

The study suggests that anything that fosters the exchange of ideas between populations that are genetically distant might help overcome barriers to development. One example, says Wacziarg, was the migration of engineers from India to the Silicon Valley as the area became a hub for information technology. He notes that this certainly helped make India a leader in software and IT services.

"You can overcome some genetic distance by bringing people close," he says. Another reason for India's commercial success with IT, notes Wacziarg, is that the Indian population, particularly in North India, is actually quite genetically close to European populations. Indians also had the advantage of speaking English, a heritage of the history of British colonization. A population more genetically and culturally distant from Europe may not have fared as well.

Wacziarg admits that his study may not have immediate policy implications for poor countries. "There is an aspect of pessimism involved in any study that says a current economic situation has roots in deep history," he explains. "You can't change deep history. There is a notion that poverty results from extremely persistent forces that are very hard to change."

But he maintains that economic development remains possible for any population. "This study suggests that anything that facilitates the flow of ideas and exchange between distant populations might help," he says. "Countries do develop and become richer. India and China are cases in point."

Read more about the study in Economic Principles.