Disease, Institutions and Underdevelopment

What explains poverty of Sub Saharan Africa and South Asia? One view holds the disease environment of these regions as the primary culprit. Others see it as a typical symptom of growth retarding institutions. We test validity of these competing assertions for a cross section of countries. Our results indicate that institutions are the prime determinant of economic performance of countries. Disease does not play a significant role in determining outcomes. On the contrary, we find support for the indirect effect of disease via institutions, as asserted by the 'institutions school'. Interestingly, the 'institutions school ' contention about geography having no direct effect on income is also not validated. Our results show that being land locked can pose significant disadvantage for a country. Endowment of hydrocarbon, however, is beneficial for economic outcomes