Rents and economic development: the perspective of Why Nations Fail
- 473 Downloads
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’.
KeywordsRents Institutions Inclusive Extractive Politics
JEL ClassificationD72 D78 O00 O43
We thank two anonymous referees and the editor for their comments and suggestions and Alex Carr for her editorial assistance.
- Acemoglu, D., & Robinson, J. A. (2012). Why Nations Fail. New York: Crown.Google Scholar
- Bell, A., Chetty, R., Jaravel, X., Petkova, N., & Van Reenen, J. (2017). Who becomes an inventor in America? The importance of exposure to innovation. NBER Working Paper No. 24062.Google Scholar
- Carbonetto, D., et al. (1987). El Perú heterodoxo: un modelo económico. Lima: Instituto Nacional de Planificación.Google Scholar
- Hsieh, C., & Klenow, P. J. (2010). Development accounting. American Economic Journal: Macroeconomics, 2, 207–223.Google Scholar
- John, R. R. (1995). Spreading the news. Cambridge: Harvard University Press.Google Scholar
- Khan, B. Z. (2005). The democratization of invention. New York: Cambridge University Press.Google Scholar
- Krueger, A. O. (1974). The political economy of the rent-seeking society. American Economic Review, 64(3), 291–303.Google Scholar
- Lane, N. (2017). Manufacturing revolutions—Industrial policy and networks in South Korea. http://nathanlane.info/. Accessed 12 Mar 2019.
- Lewis, I. M. (1961). A pastoral democracy. London: Oxford University Press for the International African Institute.Google Scholar
- McLeod, C. (2002). Inventing the industrial revolution: The English patent system, 1660–1800. New York: Cambridge University Press.Google Scholar
- Michaels, R. (1915). Political parties: A sociological study of the oligarchical tendencies of modern democracy. New York: Hearst’s International Library Co.Google Scholar
- Naughton, B. J. (2018). The Chinese economy: Adaptation and growth. Cambridge: MIT Press.Google Scholar
- OECD. (2012). OECD review of telecommunication policy and regulation in Mexico. http://www.oecd.org/sti/broadband/49536828.pdf. Accessed 12 Mar 2019.
- Pincus, S. C. A. (2009). 1688: The first modern revolution. New Haven: Yale University Press.Google Scholar
- Rodrik, D. (1996). Understanding economic policy reform. Journal of Economic Literature, 34(1), 9–41.Google Scholar
- Thompson, E. P. (1975). Whigs and hunters. New York: Pantheon Books.Google Scholar
- Tullock, G. (1967). The welfare costs of tariffs, monopolies, and theft. Western Economic Journal, 5(3), 224–32.Google Scholar