Culture Matters—Just Not as Much as Romney Thinks

The Jewish neighborhood of Pisagat Ze'ev in Jerusalem sits beyond the West Bank barrier that divides it from Shuafat, a Palestinian refugee camp on the West Bank. Photograph by Esteban Alterman/Bloomberg

Mitt Romney created a stir this week when he pointed to the immense difference in wealth between Israel and the Palestinian territories and explained it with his interpretation of Harvard economic historian David Landes’s work that “culture makes all the difference.”

By now there is wide agreement that Romney used a pretty terrible example to illustrate Landes’s point. And yet the proposition that “culture” is a factor in long-term economic performance is increasingly accepted among development economists. What Romney seems to have missed is that culture is a declining barrier to development worldwide.

After his remarks in Jerusalem set off a media firestorm, candidate Romney attempted to clarify them in interviews and a blog post in the National Review. When he talked about culture, what he meant was liberty: Pointing to the U.S., Romney suggested that “Free people and their free enterprises are what drive our economic vitality” and that these were features Israel shares. With regard to Israel and the Palestinians, his clarifications did not help bolster the case, not least because the freedom of people and enterprise in the West Bank has been considerably constrained by Israel itself. The World Bank’s latest report (PDF) on Palestine suggests that sustainable economic growth “necessitates a lifting of Israeli restrictions on access to land, water, a range of raw materials, and export markets.”

As for the broader argument that norms and inherited behavior matter to long-run economic performance, Romney’s comments weren’t entirely off-base. In a recent paper (PDF), Enrico Spolaore and Romain Wacziarg of the National Bureau of Economic Research review evidence of the “deep roots” of development. They note the considerable number of studies pointing to the importance of ethnic and linguistic factors on economic outcomes within and between countries—not least analysis by economists Stelios Michalopoulos and Elias Papaioannou suggesting that levels of regional economic development in Africa today are determined more by which ethnic group lived in the region before colonization than by which country currently controls the land.

Spolaore and Wacziarg also note that countries that are rich today are usually full of people descended from places where states were centralized; agriculture developed early; and such technologies as the wheel and the compass spread 1,000-plus years ago. Norms and values transmitted across generations may help account for that finding. Their research suggests that “genetic distance”—a measure of when two present-day populations shared common ancestors—helps to predict the difference in economic outcomes among countries. The smaller the genetic distance between two populations, the more similar their modern condition incomes.

The researchers suggest that this may be because genetically closer populations share similar cultural values, and that means technologies will spread between them more easily. An example: In the Eurovision Song Contest—a cross between American Idol and the Olympics for Europop stars—viewers in Cyprus give 7.4 points more to Greek singers than the average viewer, and Greek viewers award Cypriot singers 6.3 additional points. Such cultural affinity translates into more trade than would be predicted by standard economic models and doubtless, easier technology transfer as well.

At the same time, Spolaore and Wacziarg note that culture is less a barrier to development than it used to be. They suggest that genetic proximity has around one-half the influence on income differences today as it did in 1870. They also accept that deep historical factors such as embedded culture account for only a proportion—probably the minority—of modern variation in income across countries. One reason for this declining influence is that a range of different populations has overcome the barrier of cross-cultural technology diffusion, lowering in turn the barriers for those that follow. (Think Japan, followed by much of South Asia and East Asia.) This alone, they argue, should mean that genetic distance should eventually have no effect on income differences as more and more societies reach the global technological frontier.

A further factor behind the declining impact of culture on levels of development may be that global cultural change is itself increasingly rapid—and converging. Think about attitudes toward gay people, for example: Across the globe, discriminatory opinions have been declining as they have in the U.S. The proportion of Indians saying homosexuality is “never justifiable” has dropped from 89 percent in 1990 to 48 percent in 2008.  Worldwide attitudes on issues from the importance of girls’ education to voting have dramatically changed over the last 50 years as well. As a result, most countries see gender parity in education as a worthwhile goal, and democracy has never been as widespread. Both developments may have helped level disparities between rich and poor nations.

Perhaps the most unfortunate aspect of Romney’s comments on “culture” and development was his failure to recognize how much potential exists for development in the Palestinian territories—if Israel and the Palestinians can ever forge a durable peace. In today’s world, “culture” is a less-important factor than ever before, which means change can be incredibly rapid when circumstances allow. That’s reason for hope, even in the seeming morass of the Middle East.

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