24 March 2012

Why Nations Fail ~ Inclusive vs Extractive Politics

MIT News spotlights economics professor Daron Acemoglu and his Harvard colleague James Robinson and their new book Why Nations Fail...
"Why do some nations, such as the United States, become wealthy and powerful, while others remain stuck in poverty? [...] Politics makes the difference. Countries that have what they call “inclusive” political governments -- those extending political and property rights as broadly as possible, while enforcing laws and providing some public infrastructure -- experience the greatest growth over the long run. By contrast, Acemoglu and Robinson assert, countries with “extractive” political systems -- in which power is wielded by a small elite -- either fail to grow broadly or wither away after short bursts of economic expansion. [...] To test this reading of history, Acemoglu and Robinson use a variety of “natural experiments” (some developed in collaboration with MIT economist Simon Johnson) to examine how, other things being equal, contrasting political institutions alter the economic trajectories of countries."
Here in Acemoglu's own words...

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