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Institutions, Geography, and Growth

Roberto Rigobon PhD '97: June 5, 2004; Running Time: 57:19

About the Lecture

About the Lecture

Three billion people on earth live on less than two dollars a day. A relative handful of us fare astronomically better. How do economists account for global “haves” and “have-nots”? Roberto Rigobon attributes a vast income inequality across countries to four connecting factors: luck, geography, quality of institutions, and quality of policies. If a country lies close to the 50th parallel, its citizens’ average income is six times greater than that of an equatorial country. Heat takes a toll on nation-building. Take Caribbean and Latin American countries, which experienced a wave of malaria in the 1500’s. Spanish colonists preferred to extract resources and send them home, rather than risk death by staying. Those nations developed impoverished economies and institutions that continue today. Colonists moved to cooler climes settled down, invested in the new world, and created enduring social structures. Rigobon can’t recommend a single, economic, or political doctrine to help a struggling nation achieve prosperity. “The set of rules depends on a country’s culture, history and religion…. In the end the only sustainable regime is democracy, freedom of speech, and the rule of law, but how we get there isn’t irrelevant.” Rigobon encourages developing nations to embrace social and political conflict as “an opportunity to improve.”

Lecture Details

Location: Wong Auditorium

“I went once to a country called Belize -- a tiny dot in Central America. I was talking to the lady in charge of the central bank. I told her, the important thing is that the central banker should hate the minister of finance, because the central banker controls projects of the minister of finance. She said, “I’ll talk to my sister and tell her I hate her.” Belize has 200,000 people and 20,000 are the only ones in government.”

Roberto Rigobon

About the Speaker

Roberto Rigobon PhD '97

Professor of Economics, MIT Sloan School of Management

Roberto Rigobon researches international economics, monetary economics, and development economics. He is a faculty research fellow of the National Bureau of Economic Research, and a visiting professor at IESA, Venezuela. He joined Sloan in 1997 and has twice won the "Teacher of the Year" award and the "Excellence in Teaching.” He received his Ph.D. in economics from MIT in 1997, an M.B.A. from IESA (Venezuela) in 1991, and his B.S. in Electrical Engineering from Universidad Simon Bolivar in Venezuela.