Genetic distance, trade, and the diffusion of development

The determinants of countries’ long-term income differences feature prominently in the literature. Spolaore and Wacziarg (The diffusion of development, The Quarterly Journal of Economics 2009; 124: 469-529) argue that cultural differences, measured by countries’ genetic distance, are an important barrier to the diffusion of development from the world’s technological frontier. We revisit their findings in three ways. First, we successfully reproduce their results and confirm the robustness of their baseline findings. Second, we estimate their models for different time periods and find that the impact of genetic distance on income differences did not significantly change over time. Finally, we explore one of the underlying mechanisms of technology adoption and show that bilateral trade is one channel through which cultural differences retard the diffusion of development