Econ3109 Course Notes Essay

The most convincing argument against development is the emergence of an authoritarian government which tries to trade individual freedom for material goods. Easterly shows that there is no evidence that even a benevolent dictatorship can increase growth of the economy. Since freedom is being traded for intangible benefits in a dictatorship, it seems that free development is the best option. As Easterly says, a democracy in which people can influence their outcomes will make a happier and more productive nation. However, this does not preclude the idea of external aid working through a democratic

Economic growth, put simply, is “an increase in the amount of goods and services produced per head of the population over a period of time”; development is inextricably linked with this economic growth. By utilising theories of economic growth and development we can see how the Chinese and Sub-Saharan African economies have emerged, but, more notably, we can use these to look at patterns from past and present to show their experience and the implications of this growth for the future.

Established Stanford University professor, economist, and political scientist Barry Weingast portrays the global impact of institutions in his work through a term he coins the “fundamental political dilemma.” The dilemma illustrates that any government that has the power to protect property rights, enforce contracts, and maintain basic stability also has the power to take away the wealth of its citizens. A major question to consider, then, is what actually determines why some nations choose one route instead of the other? Weingast believes that the answer to this question lies in institutions; he states that institutions allow countries to choose the “rules of the game” and organize society. Simply put, the carefully-crafted institutions of

development is vital not only to economic progress, but to political and social progress as well.

This chapter gives an over view concept of what globalization entails. The chapter gives a great description and definition of the concept: “Globalization is a holistic, or systematic, set of structures, dynamics, functions or goals, internal constraints, and external impediments”. All of this is relative to the exchange of goods, services, e-goods, information, ect. In other definition, globalization is a process of interaction and integration among the people, companies, and governments of different nations, a process driven by

In the book, Why regions fail, it is argued that rich countries are rich because they have inclusive economic and political institutions, while poor countries are poor because they have extractive economic and political institutions. Inclusive economic institutions create the incentives and opportunities necessary to harness the energy, creativity and entreprenuership in society. Extractive economic institutions do not. For example, in the 19th century, the US became the worlds most innovative economy. At the heart of this was the paatient system that gave anyone the opportunity to take out a patent to protect intellectual property rights. In contrast, the rules that governed access to land in ejidos (mexican system of government), meant farmers

Even though institutional infrastructures are able to encourage development, the book also offers an opposing answer. The authors believe that even though it could promot development this may only happen in the short term. In the long run poverty could be a result. Another point that the authors make is known as “vicious circle”. A vicious circle is one that is usually seen at work in numerous underdeveloped countries. There has been one in existence for over the last four centuries. The vicious circle has a history where extractive institutions have been created and entrenched. They have been created by a higher colonial power. This colonial power became the rulers, but because this happened there was a result in a civil war where large groups

According to Smelser it is the economy which paves the road for culture and social changes. He believes that there is four major processes that a country goes through for achieving economic development first from simple to sophisticated technology, second change from subsistence farming to cash corps, third change from animal and human power to industrialization and finally an increasingly Urban based population ( Smelser, 1988, p. 22). The

Freedom can be defined as the absence of necessity, coercion or constraint in choice or action. In close relation this definition, Tocqueville applauds the following definition of freedom: "There is a civil, a moral, a federal liberty, which is the proper end and object of authority: it is a liberty for that only which is just and good; for this liberty you are to stand with the hazard of your very lives. . .This liberty is maintained in a way of subjection to authority; and the authority set over you will in all administrations for your good be quietly submitted unto, by all but such as have a disposition to shake off the yoke, and lose their true liberty, by their murmuring at the honor and power of authority." This definition emphasizes positive liberty, which is maintained through subjection to the authorities, which have liberty as their goal. Implicit in this definition then is the assertion that government will has the power to act in the name of society. Liberty in coordination with freedom is the state of being free. Development is to go through a process of natural growth, differentiation, or evolution by successive changes or to make active. These are the vital factor in a growing country and society.

Nevertheless, some political economists have argued that the continents underdevelopment is due to how the states were created with their political and economic link with industrialised nations. This as a result has led to industrialised countries experimenting ill designed development concepts in developing countries. Rodney (2012) argued that every nation has developed, however not on even economic grounds. He further stated that ‘’underdevelopment’’ is used by industrialised countries to exploit other countries.

North starts off by affirming that institutions are the rules of the game in a society or, are the humanly devised constraints that shape human interaction. He then studies institutions, their changes, and the effect on economic routine over time. The book is separated into three sections and the main goal is to explain ways in which institutions and institutional change affect the performance of economies focusing on an issue of primary importance-economic performance through time. The author is cautious to make the division among institutions and organizations. Although they are different, both are works of the organizational basis that supports social collaboration. Institutions can be considered the guidelines of the game and governments can be reflected as the actors, as stated previously. The purpose is to explain the way that the game is played.

Economic growth can have several meanings. Numerous economic books define economic growth as an increase in production and consumption of goods over certain period of time. Economic growth can also mean an increase in living standard of people in the given area. From another perspective it can also be said economic growth leads to betterment of living standards. Economic growth is measured through observing the change in Gross Domestic Product of a country’s economy. GDP is assumed to be the most accurate indicator of Economic change in a given country. But the result don’t always reflect the accurate economic condition of the

In the novel, Why Nations Fail, the authors Daron Acemoglu and James A. Robinson attempt to provide an alternative explanation to the economic disparities seen in the modern world. The authors argue throughout the book that political and economic institutions are the most important cause for differences in economic performances across nations. Developed countries like the United States and Great Britain took important steps in their history to move towards inclusive institutions, while nations like the Congo and North Korea continue to maintain extractive institutions. In order to support their argument, the authors cite numerous examples throughout history that demonstrate how the adoption of inclusive institutions created a virtuous cycle in developed nations, resulting in long-term prosperity. Nations with extractive institutions, however remain in a vicious cycle that inhibit their ability to prosper economically. Acemoglu and Robinson make many compelling points throughout the novel to support their claims regarding the importance of institutions by properly explaining the difference between inclusive and extractive, their importance for sustained economic growth, and using Great Britain as an example to cite institutions historical importance. The authors, however could have strengthened their arguments by addressing the difficulties in implementing institutions that are not suitable for the economic and political environments of certain nations. and the potential for

We illustrate the assumptions, the workings and the implications of this framework using a number of historical examples.

Economic development and growth should be assessed in direct correlation in a particular economy to gather an equal perspective on the composition and manner of trade as well as the emphasis on ESD in industries.