the demo-economic system finally reaches its turning point where population growth begins to
decline and the second phase of transition ignites.
Finally, to really make the point, consider an even worse scenario where b=0.002, represented
by dotted lines. Here, the reaction of population growth lets the country almost balance at
stagnation level and no positive development is visible within the given time frame. Yet, we
know from theoretical analysis that even this country will finally undergo the demographic
transition and converge towards the balanced growth path. More generally, although every
country finally manages the demographic transition, the pattern of demo-economic development
may look very different at unfavorable, tropical locations compared to the successful example
delivered by the Western world. In words of Pritchett (2000), we observe not only hills, but also
plateaus, valleys, and plains.
Putting the patterns together our analysis suggests that we observe economic divergence from
cross-country perspective during the phase of demographic transition. This relates the present
paper to Lucas (2002) who argues that ultimately “we will see a world that, economically, looks
more and more like the United States today” but that different speeds of transition are observed
based on the heterogeneity of human capital accumulation and the child quality-quantity trade-
off.9 Here we have presented a theory that explains who are the leaders and laggers in this
process i.e. why it is no coincidence that the geographically unfavorably located regions are
lagging behind.
8. Final Remarks
This article has offered a theory that explains why population growth is high at geographically
unfavorable (tropical) locations and how this may cause a particularly poor demo-economic
performance of these regions. Thereby it has been become obvious that the question whether
a country is stuck in a population- or poverty-trap or whether no such thing exists may be of
second-order practical relevance.10 For an unfavorably located region a demographic transition
(albeit perpetually ongoing) may be so exceedingly slow that it becomes indistinguishable from
actual stagnation within a medium time frame.
9See also Ngai (2004) for a related quantitative experiment within the Hansen-Prescott (2002) framework.
10Conceding, of course, that it can be an interesting theoretical issue. See Bloom et al. (2003) for a special
investigation on geographic determinism versus poverty traps.
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