Just wondered if anyone considered this. Do simple geographic factors explain differences in economic development?
Dani Rodrik, Arvind Subramanian, Francesco Trebbi have a paper on "Institutions Rule: The Primacy of Institutions over Geography and Integration in Economic Development", Journal of Economic Growth, June 2004, 9(2): pp.131-165.
They estimate the respective contributions of institutions, geography, and trade in determining income levels around the world, using recently developed instruments for institutions and trade. They results indicate that the quality of institutions trumps' everything else. They add that once institutions are controlled for, measures of geography have at best weak direct effects on incomes, although they have a strong indirect effect by influencing the quality of institutions.
If this was the case, you would expect countries geographically close to each other to have similar economic conditions. However, we can see large variation within, for example, continents.
See, for example, this country map of nominal GDP per capita from Wikipedia: https://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28nominal%29_per_capita#/media/File:GDP_per_capita_%28nominal%29_2014.png
What we currently observe as economic development is a result of past monetary/fiscal policy decisions, the reserve of natural resources a country has and a multitude of other factors which are (mostly) independent of geographical location. You might argue that neighbouring countries often have similar growth paths due to similar natural and political conditions, but this isn't always the case.
If explanation consists in identifying causal factors and assessing their importance, much depends on how far back - in time, and in links in a causal chain - one is trying to go. If one looks for the proximate causes of differences in levels of economic development, considering only current or recent factors, then explanations in terms of inherited physical and human capital are likely to play a central role, with governance and cultural factors also important. Geography also plays a role, especially in enriching countries with large oil reserves, and acting as a constraint on development in regions of water scarcity.
If one seeks to trace the causal chain much further back, then a case can be made that the role of geography becomes much more important. In his book Guns, Germs and Steel, Jared Diamond argues that the more advanced development of Eurasia relative to other parts of the world can be largely explained in terms of what can broadly be described as geographical factors. However, the factors he describes are not simple. He refers for example to the distributions of plant and animal species suitable for domestication, to the distributions of diseases, and - in respect of Europe's development in the mediaeval and early modern period - to the effects of geography favouring a division into relatively small nation-states, with the resulting competition providing a spur to development. Even if not every detail of his argument is persuasive, he makes a strong case overall that geographical factors should play a major role in very long-term explanations of differences in development.