Economics Dictionary of Arguments

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Economic development: Economic development is the process of improving the economic well-being and quality of life for a nation, region, local community, or an individual. It encompasses the creation of wealth, the generation of employment opportunities, and the enhancement of human capabilities. Economic development is often measured by indicators such as gross domestic product (GDP), income per capita, and poverty rates. See also Economy, Progress, Economic growth, Capabilities.
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 Development - Dictionary of Arguments

Acemogu I 83
Economic Development/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
, >Prosperity/Acemoglu, >Political Institutions/Acemoglu.
Acemogu I 106
The divergent paths of English, French, and Spanish societies in the seventeenth century illustrate the importance of the interplay of small institutional differences with critical junctures. >Institutions/Acemoglu.
During critical junctures, a major event or confluence of factors disrupts the existing balance of political or economic power in a nation. These can affect only a single country, such as the death of Chairman Mao Zedong in 1976, which at first created a critical juncture only for Communist China. Often, however, critical junctures affect a whole set of societies, in the way that, for example, colonization and then decolonization affected most of the globe. Such critical junctures are important because there are formidable barriers against gradual improvements, resulting from the synergy between extractive political and economic institutions and the support they give each other.
For economic development see also >Economic growth/Acemoglu, >Technology/Acemoglu, >Economic Institutions/Acemoglu, >Political Institutions/Acemoglu.
Acemoglu I 109
The richly divergent patterns of economic development around the world hinge on the interplay of critical junctures and institutional drift. Existing political and economic institutions - sometimes shaped by a long process of >institutional drift and sometimes resulting from divergent responses to prior >critical junctures - create the anvil upon which future change will be forged.
E.g., the Black Death and the expansion of world trade after 1600 were both major critical junctures for European powers and interacted with different initial institutions to create a major divergence.
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Acemoglu I 272
Reversed development in developing countries: E.g., India: The East India Company looted local wealth and took over, and perhaps even intensified, the extractive taxation institutions of the Mughal rulers of India. This expansion coincided with the massive contraction of the Indian textile industry, since, after all, there was no longer a market for these goods in Britain. The contraction went along with de-urbanization and increased poverty. It initiated a long period of reversed development in India. Soon, instead of producing textiles, Indians were buying them from Britain and growing opium for the East India Company to sell in China. >Developing countries/Acemoglu.
Africa: The Atlantic slave trade repeated the same pattern in Africa, even if starting from less developed conditions than in Southeast Asia and India. Many African states were turned into war machines intent on capturing and selling slaves to Europeans.
The South African state created a dual economy, preventing 80 percent of the population from taking part in skilled occupations, commercial farming, and entrepreneurship. All this not only explains why industrialization passed by large parts of the world but also encapsulates how economic development may sometimes feed on, and even create, the underdevelopment in some other part of the domestic or the world economy.
Acemoglu I 282
Development in individual countries: Australia, like the United states, experienced a different path to inclusive institutions than the one taken by England. ((s) For „inclusive institutions“ see >Terminology/Acemoglu.)
The same revolutions that shook England during the Civil War and then the Glorious Revolution were not needed in the United States or Australia because of the very different circumstances in which those countries were founded—though this of course does not mean that inclusive institutions were established without any conflict, and, in the process, the United States had to throw off British colonialism. In England there was a long history of absolutist rule that was deeply entrenched and required a revolution to remove it. In the United States and Australia, there was no such thing. The inclusive institutions established in the United States and Australia meant that the Industrial Revolution spread quickly to these lands and they began to get rich. The path these countries took was followed by colonies such as Canada and New Zealand.

Literature: The notion that the development of the rich countries of the West is the mirror image of the underdevelopment of the rest of the world was originally developed by Wallertsein (1974–2011)(1), though he emphasizes very different mechanisms than we do.

1.Wallerstein, Immanuel (1974–2011). The Modern World System. 4 Vol. New York: Academic Press.

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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