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Brookings Trade Forum 2006 (2006) 43-53

Comments and Discussion
[Article by Lant Pritchett]

Clifford G. Gaddy: Lant Pritchett has written a stimulating paper, rich in empirical observations and original insights and bold in its conclusions. His notion of economic "zombies" is especially attractive. I would like to suggest a way to extend its application.

What are zombies? We are familiar with ghost towns. These are places that have lost their populations as economic conditions shifted so fundamentally that the reason for their being has disappeared. People can vote with their feet: they leave and move elsewhere. This is healthy. What is unhealthy is when people want to move but cannot. When migration is ruled out as a response to the changed conditions, people may remain trapped in a region where living standards fall. The region should shrink but does not. It does not become an actual ghost. Rather, it is a potential ghost, or zombie. Zombie regions are populated by "the living dead with falling wages and incomes."

Despite the title of this paper, Lant's main concern is not ghosts but zombies. Moreover, his interest is in a particular kind of zombie—a spatial or geographic zombie. These are distinguished from institutional (or policy) zombies, which are potential institutional ghosts. The distinction has to do with the shock that should produce the ghost. Some regions or countries have been depopulated because the policies pursued, or the institutions pursued, or both are bad. But policies can be fixed (at least in principle). Spatial zombies are a worse case, because geography cannot be fixed.

Lant suspects that geographic zombies do exist and points to two things that make it likely that they do. First is the "proliferation of sovereigns." This has led to an increasing number of smaller states in the world. The second factor is a lack of mobility of labor across all national borders. When a geographic or spatial shock hits one of these smaller states in the absence of cross-border mobility, a zombie may result. [End Page 43]

How does one know if a country is a zombie? A ghost is easy to identify: simply look for a large population loss over a relatively short period of time. Lant uses various historical examples to demonstrate that ghosts exist. Identifying a zombie is more difficult, however, because zombies involve a counterfactual. One has to see if the hypothetical desired population is less than the actual population. The challenge is to establish the benchmark, that is, the desired population. To show that a country is a zombie, one needs to show what should have happened in the presence of the negative geographic shock, if there had been labor mobility.

What exactly is a geographical shock? I interpret Lant's notion of a negative geographic shock to mean an event that reduces the value of the geography input in the production function. These geography inputs might include features such as the existence or nonexistence of coasts and ports or, for example, the climate—is it hot, temperate, or cold? The terrain—does it have mountains, deserts, swamps, or none of these? Is the country compact or is it extended? And then, of course, there is the critical question of resources—does the country have oil, gas, gold, water, or another exploitable resource?

What would be a shock to such geography inputs? In the idealized laboratory experiment, one might reach down and do something like take away the country's coast or remove a large river or throw up a mountain range between two major cities. One might raise or lower the average temperature of the country a couple of degrees. But can anything like that possibly happen in the real world? It might seem that geographical features do not change, that they are God-given. But there are in fact ways that geography, or at least the value of geography, can change. Lant lists a number of such events or circumstances. The most familiar of them is one in which a nonrenewable resource is exhausted or...


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pp. 43-53
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Archived 2012
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