Dependency or Institutions? Economic Geography, Causal Mechanisms, and Logic in the Understanding of Development

What explains the global distribution of growth and economic activity? Proponents of unit-level explanations dismiss systems-level arguments like dependency and world systems theory for logically incorrect reasons. They argue that these system-level arguments lack the precise mechanisms that various unit-level arguments provide. But the absence of precise system-level causal mechanisms in some system-level theories does not logically imply that all system-level theories are wrong. Economic geography provides system-level theories with precise mechanisms that comport with most of the economic predictions offered by dependency theories. This does not mean that unit-level theories are either wrong or useless, but rather that unit-level explanations must (1) claim that the new economic geography is totally wrong, or (2) show how system and unit-level mechanisms interact causally, or (3) argue that unit-level mechanisms are independent of system-level causal mechanisms.