8. Political Economy - Readings
- Chapter 3 in Daron Acemoglu and James A RobinsonWhy Nations Fail: The Origins of Power, Prosperity, and Poverty (New York: Crown Business, 2008).
Chapter 3 outlines the central thesis of the book: that differences in income per capita around the world today, and the trajectories of economic development are determined by political and economic institutions. AJRThe common nickname for “Acemoglu, Johnson, and Robinson”, who frequently collaborate on these issues (see the primary sources below).
distinguish between “inclusive institutions” and “extractive institutions,” and describe how the distribution of political power affects political institutions, which in turn affect economic institutions, which affects a nation’s ability to sustain economic growth.
- Chapter 1 in ibid.
Chapter 1 sets the stage with a number of stories that emphasize the differences in inclusive vs. extractive institutions, primarily by comparing the colonization experience of the Spanish in South/Central America and the English in North America.
- Stigler (1971), “The Theory of Economic Regulation”
- Kreuger (1974), “The Political Economy of the Rent-Seeking Society”
- Acemoglu and Robinson (2000), “Political Losers as a Barrier to Economic Development”
- Acemoglu, Johnson, and Robinson (2001), “The Colonial Origins of Comparative Development: An Empirical Investigation”
- Acemoglu and Johnson (2005), “Unbundling Institutions”
- Baumol (1990), “Entrepreneurship: Productive, Unproductive, and Destructive”
- Tullock (1967), “The Welfare Cost of Tariffs, Monopolies, and Theft”
- Alchian (1950), “Uncertainty, Evolution, and Economic Theory”
- Murphy, Shleifer, Vishny (1991), “The Allocation of Talent: Implications for Growth”
- Glaesar et. al (2004), “Do Institutions Cause Growth?”
Questions to Read For:
According to Acemoglu and Robinson, what is the difference between “inclusive” institutions and “extractive” institutions?