One of the most fundamental facts of life is that where you are born is a huge determinant of how your life will turn out. Someone’s chance of leading an economically secure life is vastly higher if they happen to be born in Zurich, Seattle, or Kyoto rather than Mumbai, Nairobi, or Caracas.
But why are some places much better at providing an environment for the development and adoption of technology than others? Much of the divergence between rich and poor places can be traced back in time to the emergence of a set of institutions in Europe, which have partially spread around the world. Northwestern Europe was already substantially richer than other world regions well before the Industrial Revolution, but there is an ongoing debate in economic history on the reasons for Europe’s divergence from the rest of the world.
While geography and culture have likely played some role, as well as expropriation through colonialism, the nature and the development of the state is the most important factor behind economic fortunes. ‘Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice: all the rest being brought about by the natural course of things’, wrote Adam Smith back in 1755.