The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments.
Empirical studies of the impact of geography and institutions on growth and development at the international level have become common place, but the high degree of abstraction at that level has led to calls for subnational studies. This paper examines these issues for a region of the United States, Appalachia, where the specific factors at play are identified and measured thus obviating the need for instrumental variable techniques. The evidence suggests that initial conditions, including both geography and institutions, are very important for economic development, having significant effects lasting hundreds of years.