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What Makes Countries Rich or Poor

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Submitted By sneekand
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What Makes Countries Rich or Poor? by Jared Diamond |The New York Review of Books. I find the topic extremely fascinating: why do some nations prosper, and improve the life of their citizens, and others fail? Why do some nations have better education, while others are still in endless search of their identity? Some people in modern political economy say that countries succeed because of their natural resources and their control over others. This article brings us to take a closer look in order to answer this question. Idea of the right economic institutions is vital has long been recognized, but what authors want to emphasize is the critical role of politics. At the beginning of the article authors try to show us the differences between the past and the present political institutions of the U.S and of Mexico have a lot to do with the differences in prosperity. The two cities share the same climate, the same geology, pretty much the same ethnicity, and yet the Northern city is a couple of times as wealthy as its Southern companion. Authors argue that an inclusive political system (equal opportunities and respect of property rights) will allow for an inclusive economic system. Furthermore, I think, article leads us to the conclusion that it might be helpful to have natural resources, but it is much more important what the people do with those resources. Authors are trying to point out the failings and inconsistencies with the existing theories (geography hypothesis, culture hypothesis, and ignorance hypothesis). To summarize, I agree with a review article on the book of Acemoglu and Robinson that institutions are very important in nation’s well being. To fully evaluate such piece of work one needs to read the whole version of the book. Yet without doing so I would add that those inclusive institutions are formed on people believes and vision of the future, their cultural preferences and personal characteristics. And hopefully, with more people reading this article and furthermore a full version of the book, we will see more examples towards inclusive institutions in the 21st century.…...

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