Ignoring The Prosperity Playbook

Download or read book (Ignoring) the Prosperity Playbook written by Victor A. Menaldo and published by . This book was released on 2016 with total page 18 pages. Available in PDF, EPUB and Kindle. Book excerpt: Why are some countries rich and others poor? It's not rocket science. It comes down to good governance; more specifically, secure property rights and policies that reduce transaction costs. In turn, this means the rule of law: limits on executive authority and a government that impartially enforces contracts, and thus abstains from picking winners and losers. It also means a government that solves market failures related to coordination problems, information asymmetries, and externalities. Yet the governments of developing countries often do the exact opposite of what promotes long run growth. This article departs from conventional explanations for that puzzle by offering a unified theory of economic pathologies endemic to the developing world. An underlying syndrome rooted in weak state capacity induces a host of symptoms: large informal economies, policies aimed at destroying innovation, the endurance of state monopolies, policies that cripple the rural sector, and an over-dependence on natural resources. Given the need to raise revenues in short order to survive, the rulers of poor countries have no better choice.