Economics Dictionary of Arguments

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Economic growth: Economic growth is the increase in the production of goods and services in an economy over a period of time. It is typically measured as a percentage change in real gross domestic product (GDP), which is the total value of all goods and services produced in a country in a given year, adjusted for inflation. See also Economy, Economic development.
Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments.

Author Concept Summary/Quotes Sources

Daron Acemoglu on Economic Growth - Dictionary of Arguments

Acemoglu I 83
Economic growth/Acemoglu/Robinson: Political and economic institutions, which are ultimately the choice of society, can be inclusive and encourage economic growth. Or they can be extractive and become impediments to economic growth. Nations fail when they have extractive economic institutions, supported by extractive political institutions that impede and even block economic growth. But this means that the choice of institutions - that is, the politics of institutions - is central to our quest for understanding the reasons for the success and failure of nations. >Institutions/Acemoglu
, >Properity/Acemoglu, >Political Institutions/Acemoglu.
Question: Wouldn’t every citizen, every politician, and even a predatory dictator want to make his country as wealthy as possible?
Acemoglu I 84
Unfortunately for the citizens of many countries in the world, the answer is no. Economic institutions that create incentives for economic progress may simultaneously redistribute income and power in such a way that a predatory dictator and others with political power may become worse off.
Institutions: The fundamental problem is that there will necessarily be disputes and conflict over economic institutions. Different institutions have different consequences for the prosperity of a nation, how that prosperity is distributed, and who has power. The economic growth which can be induced by institutions creates both winners and losers. Even though mechanization led to enormous increases in total incomes and ultimately became the foundation of modern industrial society, it was bitterly opposed by many. Not because of ignorance or shortsightedness; quite the opposite. Rather, such opposition to economic growth has its own, unfortunately coherent, logic. >Institutions/Acemoglu.
Schumpeter: Economic growth and technological change are accompanied by what the great economist Joseph Schumpeter called creative destruction.New firms take business away from established ones. New technologies make existing skills and machines obsolete.
Conservatism: The process of economic growth and the inclusive institutions upon which it is based create losers as well as winners in the political arena and in the economic marketplace. Fear of creative destruction is often at the root of the opposition to inclusive economic and political institutions.
Acemoglu I 86
The logic of why the powerful would not necessarily want to set up the economic institutions that promote economic success extends easily to the choice of political institutions.
Acemoglu I 92
Extractive institutions: There are two distinct but complementary ways in which growth under extractive political institutions can emerge.
1) (...) even if economic institutions are extractive, growth is possible when elites can directly allocate resources to high-productivity activities that they themselves control. E.g. the economic growth and industrialization of the Soviet Union from the first Five-Year Plan in 1928 until the 1970s. Political and economic institutions were highly extractive, and markets were heavily constrained. Nevertheless, the Soviet Union was able to achieve rapid economic growth because it could use the power of the state to move resources from agriculture, where they were very inefficiently used, into industry.
2) The second type of growth under extractive political institutions arises when the institutions permit the development of somewhat, even if not completely, inclusive economic institutions. >Institutions/Acemoglu.
Acemoglu I 124
Growth with extractive institutions: (...) if most societies in history are based on extractive political and economic institutions, does this imply that growth never takes place? Obviously not. Extractive institutions, by their very logic, must create wealth so that it can be extracted. A ruler monopolizing political power and in control of a centralized state can introduce some degree of law and order and a system of rules, and stimulate economic activity.
Acemoglu I 149
The growth generated by extractive institutions (>Terminology/Acemoglu) is very different in nature from growth created under inclusive institutions (...). Most important, it is not sustainable. By their very nature, extractive institutions do not foster creative destruction and generate at best only a limited amount of technological progress. The growth they engender thus lasts for only so long. >Soviet Union/Acemoglu.

Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments
The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition.

Acemoglu II
James A. Acemoglu
James A. Robinson
Economic origins of dictatorship and democracy Cambridge 2006

Acemoglu I
James A. Acemoglu
James A. Robinson
Why nations fail. The origins of power, prosperity, and poverty New York 2012

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