Why the Southern Hemisphere is Poorer

 This video was made possible by Morning Brew. Subscribe to their free daily newsletter at the link in the description to make a daily habit of learning what’s going on in the world. This is a map of the world, these are countries, this is their GDP per capita, and that’s the equator. With a mere glance, a pattern emerges. This half of the world—the southern hemisphere—is poorer than this half—the northern hemisphere. Of course, GDP is an imperfect indicator, but even when you swap to another—like the United Nations’ Human Development Index—the pattern holds. The southern hemisphere is, on average, less developed than the north. In fact, of the fifty-eight countries theWorld Bank classifies as “high income,” a mere five—Chile, Uruguay, Seychelles, Australia, and New Zealand—are located south of the equator. 

If you look at the entire global distribution of wealth and average it to find the center—the world’s economic center of gravity—that point is located here—northeast of Moscow, at roughly the same latitude as Stockholm. That center of wealth is pulled to this point by the world’s three main economic centers: southeast Asia, western Europe, and NorthAmerica. The southern hemisphere, representing just11% of the world’s population, has little economic sway, meager political influence, and has never, in modern history, enjoyed a similar level of development to its northern counterpart. So… why? The quick answer is we don’t know. As any phenomenon grows in size, and accurate explanation grows increasingly difficult. This phenomenon spans the entirety of the world's geography, the entirety of modern history, and the entirety of the global economy. 

Therefore, any explanation is a mere theory. Theories are not fact, but rather represent a strong consensus in academic thinking. That being said, through time, theories can be proved flawed, limited, or flat-out false. In fact, in the past hundred years, the way in which we think about how geography correlates to wealth has changed fundamentally. Take, for example, this—the opening lines of the 1915 book Civilization and Climate, by Ellsworth Huntington. “The races of the earth are like trees. Each according to its kind brings forth the fruit known as civilization. As russet apples and pippins may grow from the same trunk, and as peaches may even be grafted on a plum tree, so the culture of applied races may be transferred from one to another. Yet no one expects pears on cherry branches, and it is useless to look for Slavic civilization among the Chinese.” He goes on to liken the actions of humans to a grower cultivating their vineyard—this can enhance a crop, but what matters more is the geography of where the grapes grow. No matter how well cultivated, you’d never expect good grapes from Greenland.

Huntington posits that the two key factors influencing the success of a vineyard are its environment—which it inherited—and its health—which is dependent on human action. Huntington then asks, “Does the fruit known as civilization depend upon these same conditions? It seems to me that it does. Few would question that a race with a superb mental and physical inheritance and endowed with perfect health is capable of adding indefinitely to the cultural inheritance received from its ancestors and thus may attain the highest civilization. But if that same cultural inheritance were given to a sickly race with a weak inheritance of both mind and body, there would almost surely be degeneration.” In short, Huntington argues that if one were to give good land to, in his words, a “sickly race,” they would be incapable of properly developing it. Rhetoric like this is what was used to justify colonialism. Further core arguments of the book include theories positing that mental abilities correlate to average temperatures—the colder the climate, the smarter its people are. 

Therefore, in his logic, if you took people with higher mental abilities, from the cooler areas, and brought them to manage the hotter areas, they would be more successful, both literally and figuratively, in cultivating the land. This is false. This is also, unequivocally, racist. It’s no surprise that later in his career, Huntington’s research devolved into flat-out eugenics. We now know the belief that in a hotter environment makes people, quote, unquote, “uncivilized,” as was once a prevailing view, is absurd. The temperature or physical environment of a place does not change a person in any meaningful way. The reason this southwest corner of Egypt, for example, is almost completely undeveloped is not that the sun is degrading its people’smental abilities. However, simultaneously, it would be absurd to believe that geography does not play a role in development. We know, with some certainty, that the reason this corner of Egypt is almost completely undeveloped is that it's in the Sahara Desert—with inhumane heat, little to no water, and few desirable natural resources. 

The thin line between racism and legitimate theory is what makes examining any correlation between geography and wealth so difficult. However, a simple rule can delineate the two. Geography does not influence a person's ability to develop a place. However, geography can influence a place’sability to be developed by people. A place’s development potential is absolutely influenced by geography. Therefore, that poses a question: what does the northern hemisphere have that the southern does not? In short: latitude. Not only does the southern hemisphere have about half as much land as the northern, but that land does not stretch as far from the equator. For example, Cape Town, at the southern tip of Africa, sits about 34 degrees south of the equator. In the northern hemisphere, cities at an equivalent distance to the equator include Los Angeles or Baghdad—hardly what anyone would consider“northern cities.” So, what effect does this have? This is a graph composed of the countries of the world. 

The higher a given country is, the wealthier it is on a per capita basis, while the further to the right it is, the further it sits from the equator. The pattern that emerges is decisive. The further a country is from the equator, the wealthier it is. Therefore, a plausible reason for why the southern hemisphere is poorer is simply that its landmass sits closer to the equator. But that’s not a full explanation, because it then presents a new question: why are equatorial countries poorer? Bounded by the perspective of our lifetimes, it's easy to forget how close we are in history to an era dominated by agriculture. Just 100 years ago, when the world was the domain of many of our grandparents, 70% of earth’s working population was employed in agriculture. Today, that number is just 27%. As industry innovation and mechanization ramped up, so too did per person productivity. However, 27% is an average of a highly variable dataset. Today, 1.66% of the US labor force is employed in agriculture. 86% of the Central African Republic’s is. This indicator represents one of the starkest differences between rich and poor countries. 

Places like the UK, France, Japan, and Australia sit at low single-digits, while those like Mauritania, Madagascar, and Laos sit at high double-digits. Unsurprisingly, comparing this map to that of GDP per capita, it tracks quite closely. Countries with low GDP have high agricultural employment percentages and vice versa. So, does that mean poverty creates high agricultural employment rates, or that high agricultural employment rates create poverty? Or, rather: is this correlation or causation? Well, according to the Food and agriculture organization of the United Nations, 60% of the calories humans consume are derived from just three crops: maize,—or corn, as it’s known in the US—rice, and wheat. Now, in agriculture, as any farmer will tell you, the climate is everything. In the case of wheat, the highest yield temperature—as in, the temperature that leads to the largest harvest of crop per unit of land—is about 74 degrees Fahrenheit or 23 Celsius. Every degree Celsius above that, average wheat yields decrease by 10%. 

What this means is that more equatorial countries, which tend to be hotter, have less productive wheat crops. The Food and Agriculture Organization of theUnited Nations created this map to show the average possible wheat yield around the world, and unsurprisingly, it roughly correlates with the map of the country’s agricultural labor force proportion. This makes sense: the less productive farmlands, the more people you need to produce a person’s worth of food. The more people working to create food, the less there are to innovate and grow an economy. Therefore, this also correlates to the map of the country’s GDP per capita or human development index. While every crop is different, in terms of its ideal temperature, as a generalization, warm, but not hot, places are those best suited for agriculture. Those warm but not hot places are overwhelmingly located in the temperate zone of latitudes, which encompasses very little of the southern hemisphere's landmass. It’s a similar story to the disease. The burden of disease, while heavily skewed by equatorial Africa, is, on average, higher the closer to the equator a country is. 

Malaria, for example, is one of the most deadly infectious diseases in the world. It is prevalent predominantly in areas that are hot year-round have high humidity, and have lots of rainfall which, overwhelmingly, represent Equatoria regions. Beyond Malaria, the lack of a cold season in equatorial regions means that insect populations run rampant, and mosquitos, ticks, fleas, and others are some of the most reliable disease vectors out there. Now, of course, in addition to insect-borne diseases, more common in equatorial areas, there are those that clearly are more common poverty-stricken places. Diarrhea, for example, is a leading cause of death worldwide, and its root cause is often contaminated drinking water, which is more common in places with inadequate or nonexistent water infrastructure. Therefore, it’s clear that poverty can spur disease, but less clear whether the disease can spur poverty. This is a topic that has been debated in the world of international development for decades, but a loose consensus has formed that suggests the answer is yes: a higher burden of disease can negatively impact a national economy. Of course, this makes sense. The disease often means a person is unable to work, which means they are no longer able to expand an economy. 

So, its clear that around the equator, povertyis increasing disease, and disease is increasing poverty, even if its unclear the extent towhich it’s one versus the other. So, correlative factors such as agriculturalyield, disease burden, and more certainly can cause a degree of poverty. However, it would be obtuse to think thatthe incredible level of inequality in the world—with the average Norwegian earningan average annual Somalian income in just three days—can be entirely explained bysome heat, wheat, and bugs. More likely, these factors opened a gap thathas been widened through time. In the US’ National Hockey League, 31 teamscompeted in the 2020 - 2021 season, and their performance varied dramatically. At the upper end of that spectrum, the Washington Capitals did quite well, having won some 36 games, while the Columbus Blue Jackets did…less well, having won just 18. The Washington Capitals was established, asa team, in 1974, while the Blue Jackets was formed in 1997. So here’s the question: is the reason theCapitals are better than the Blue Jackets because they’ve had more time to develop? That is, are the Blue Jackets fundamentallyas good as the Capitals, but just 23 years behind in their development? 

Or rather, are the Blue Jackets performing poorly because, in a sports league, by nature, some teams have to perform worse, and are pushed into that position by certain teams acquiring the best players, hiring the best coaches, and building the best facilities? Applying the same logic to countries, the former theory would suggest that the reason why Russia is less developed than the UK is that the UK experienced its industrial revolution from 1760 to 1820, while Russiawaited until 1850 to 1920 to have it's in earnest. Therefore, with a 100-year head start, the UK sits further along in the timeline of development. For the longest time, this was the explanationfor inequality, and interventions involved attempting to speed up a country’s progressionin the supposed development timeline. Certain countries started their industrial development first so now, in an era where industrialization is everything in an economy, certain countries have a leg up. 

That explanation eventually fell out of favor. It was once thought that after Africa decolonized, once any gains from industry would go to a country itself, rather than its colonizer, that these places would start their process of development. But then they didn’t. Many African countries are still in as desperate a state as fifty years ago, and simply aren’t developing at all. Therefore, updated explanations have emerged—explanations that would suggest that the reason certain countries are poor is not because of their place in time, but rather their place in the world economy. Imagine there are just two countries. One has a GDP per capita of $10,000, the other$20,000. 

The poorer country sells what we’ll call primary goods—products that don’t require manufacturing, like agriculture and raw materials. The second country, however, sells manufactured goods. They’ll take a tree and turn it into a stool, for example. But now the richer country has invented ice cream. Of course, people don’t need ice cream. People want ice cream, but they don’t need it. Therefore, people only buy ice cream when they have the money to do so—as in when they’re wealthier. Because the wealthier country has now invented a way to turn cheaper raw materials into a more expensive product, they’re now getting richer. They’ll sell some of this within their own country, some to the other country, and also buy some raw materials to make the ice cream from the poorer country. 

Because the rich country is getting richer, more people are able to buy that ice cream, so demand goes up. And as is economics 101, when demand for a product goes up, but supply stays stable, so does the price. This cycle repeats itself—the rich countrymight invent bikes, then lightbulbs, then eventually smartphones, and all the while, it's buying the materials to make these products from the poorer country—the one that sellsprimary goods. Meanwhile, demand for primary goods has stayed relatively stable. 

People buying manufactured goods aren't necessarily buying many more things, but just more expensive things, so the raw materials industry is about stable, and with products like food, one person still buys about one person's worth of food, regardless of income. So, in summary, we know that demand for primary goods, like food and raw materials, stays relatively stable regardless of a person's income. Demand for manufactured goods, however, increases dramatically as one’s income does. Therefore, through time, the primary good country's economy stays relatively stable, while the manufactured goods country’s economy grows. All the while, the prices for manufactured goods rise, as demand does, because the manufactured goods country’s people are becoming wealthier. Therefore, people in the poorer country are increasingly less able to buy these manufactured goods, as their incomes have stayed relatively stable. This is what’s theorized to be happening in the real world, right now. We know that Papua New Guinea, for example, cannot make iPhones. 

Their industrial sector just is not equipped for the most advanced manufacturing. Therefore, their economy is more centered around primary goods—it's an extractive economy. Places like Japan, however, have developed much, and their wages have grown so much, that it rarely makes financial sense for them to produce primary goods, rather than manufactured goods. Therefore, we can say that, in general, poorer countries produce primary goods, richer countries produce manufactured goods. The total cost of the raw materials in an iPhone, for example—as in, the materials before any manufacturing process—is just a few dollars. Through advanced manufacturing, that is transformed into something that sells for more than $1,000. Therefore, with this theory, it’s believed that poorer, primary goods-producing countries are serving a crucial role in the world economy, but not one that creates significant profit. 

As a result, they have no money to invest in advancing their economy and are stuck producing primary goods. While this theory has lost some relevance as outsourcing has become more common, it's still the case that the companies profiting from advanced manufacturing are overwhelmingly located in rich countries, even if the manufacturing itself has moved somewhat to poorer countries. This is only a part of a complex and still controversial theory, but at the crux of it is a simple belief: poorer countries are dependent. They create resources, and these resources flow to richer countries, which reap the majority of their gains. While this was very much the case during the era of colonialism, countries exited this era with largely the same economic system. Therefore, they were stuck making primary goods, where they’re unable to accumulate significant capital and advance their economy. At the crux of it, according to this theory, poor countries get poorer, and rich countries get richer. 

The countries closer to the equator, and those that disproportionally make up the southern hemisphere, do have natural factors that legitimatelynegatively impact their ability to develop economically. These factors very possibly were the origins of the development gap between, for example, Europe and Africa. However, there is an increasing, albeit controversial, consensus around the thought that our modern, the global economic system might be working to widen the gap between rich and poor. Nobody’s becoming a billionaire by running the farm. They’re becoming a billionaire selling iPhones. Therefore, as some countries are stuck sellingfood, minerals, and other raw materials to those that transform them into profit, their cycle of poverty is bound to continue. This video, like many of mine, strives to explain how the world works, and one of the best ways to understand how the world works is by following what’s happening in it. 

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