Abstract
We present the approach to comparative economic development of Why Nations Fail. Economic prosperity requires inclusive economic institutions—those which create broad based incentives and opportunities in society. Extractive economic institutions, which lack these properties, create poverty. Variation in economic institutions is created by differences in political institutions. Inclusive economic institutions are the result of political choices which arise under inclusive political institutions: a strong state and a broad distribution of power in society. When either of these conditions fails one has extractive political institutions that lead to extractive economic institutions. We relate our analysis to Tullock’s notion of ‘rent seeking’.
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Notes
To the extent that this is not true anymore in the U.S. it would be a key sign that institutions were no longer as inclusive as they have been in the past, on which see Bell et al. (2017).
See Lawson and Clark (2010) for a related diagram examining the interaction between ‘economic freedom’ and ‘political freedom’.
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We thank two anonymous referees and the editor for their comments and suggestions and Alex Carr for her editorial assistance.
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This paper was written to commemorate the 50th anniversary of Gordon Tullock’s 1967 paper which initiated the concept of “rent seeking”.
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Acemoglu, D., Robinson, J.A. Rents and economic development: the perspective of Why Nations Fail. Public Choice 181, 13–28 (2019). https://doi.org/10.1007/s11127-019-00645-z
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DOI: https://doi.org/10.1007/s11127-019-00645-z