The paper by William Easterly and Ross Levine examines the impact of geographic endowments, such as tropical location, disease environments, and crop suitability, on economic development. They test three main theories: the geography hypothesis, the institution hypothesis, and the policy hypothesis. The authors find that these endowments affect development through institutions rather than directly influencing country incomes. Specifically, they find that tropical locations, disease environments, and crop suitability shape the formation of long-lasting institutions, which in turn influence economic development. The study uses cross-country data from 72 former colonies to assess the impact of these endowments on economic and institutional development. The results suggest that endowments play a significant role in shaping economic and institutional outcomes, but this effect is mediated by institutions rather than directly influencing economic growth.The paper by William Easterly and Ross Levine examines the impact of geographic endowments, such as tropical location, disease environments, and crop suitability, on economic development. They test three main theories: the geography hypothesis, the institution hypothesis, and the policy hypothesis. The authors find that these endowments affect development through institutions rather than directly influencing country incomes. Specifically, they find that tropical locations, disease environments, and crop suitability shape the formation of long-lasting institutions, which in turn influence economic development. The study uses cross-country data from 72 former colonies to assess the impact of these endowments on economic and institutional development. The results suggest that endowments play a significant role in shaping economic and institutional outcomes, but this effect is mediated by institutions rather than directly influencing economic growth.