Making Poor Nations Rich

Is a new book available on economic development offering reasons as to why some countries are rich and others are poor, why some countries become rich when they were poor, and why other countries fail after having had some success. Peter Boettke, Christopher Coyne, Peter Leeson, and I have papers published in it. Contributors include Ayittey, Baumol, Beaulier, Dorn, Holcombe, Johansson, Lawson, Llosa, Olson, and Shah and Sane. It was edited by Benjamin Powell from Suffolk University. Making Poor Nations Rich mainly deals with the importance of entrepreneurship in economic development. It examines the institutional conditions for the emergence of entrepreneurship, as well as the cultural context, the evolution of beliefs, etc. The book is published by Stanford University Press and The Independent Institute. Deepak Lal wrote an excellent foreword in which he emphasizes the role of institutions and beliefs in development. Here are two interesting passages:

The globalization of capitalism has… been resisted by two groups—the cultural nationalists of the Third World and various dirigistes in all three worlds. The origins of this hatred of capitalism and its main agents—entrepreneurs—arise because the change in material beliefs associated with the eleventh century legal papal revolution was preceded an precipitated by an earlier papal family revolution in the sixth century by Pope Gregory the Great. This changed the West’s cosmological beliefs by promoting individualism, the independence of the young, and love marriages, as contrasted to the communalist values and arranged marriages that remain common to this day in the rest of Eurasia. (p. xiii)

The socialist panaceas combined the rationalism of the Enlightenment with the critique of the Romantic revolt as represented in the writings of the young Marx and the Fabian socialism of the Webbs and William Morris in the United Kingdom. They offered a route whereby countries could try to modernize without losing their souls. With the death of the countries of “really existing socialism,” the harder socialist panaceas based on the plan were seen to be dead ends, but a softer version based on the desire to have “capitalism with a human face” still survives. (p. xiv)

Making Poor Nations Rich is a great book that anyone interested in the role of entrepreneurship in economic development should read. It includes some fundamental papers that have shaped the current discussions on the role of institutions and entrepreneurship (e.g. Baumol’s paper on the three types  of entrepreneurship). Benjamin Powell did a great job in putting all this together (with an introduction and his excellent paper on Ireland). Thanks Ben!

Comments

[Dain]

I would submit that the origin of hatred of capitalism is at least partially due to its percieved link to imperialism. Lal himself has contributed to this problem with his book In Praise of Empires.

[John David Galt]

I would like to see more attention paid to those who would keep the poor nations poor. In particular I mean
(1) the United Nations' "Agenda 21", which otherwise pro-growth President Bush has now signed; and
(2) the world environmental movement, which is largely a cover for a group that want to cartelize the world economy along the lines of the former Soviet Union, with themselves in charge.
As these groups become successful they will be able to do a lot more damage than they have up to now.

Aside from them, the main thing that keeps poor countries poor is their own government leaders, who grab whatever they can plunder to enrich themselves personally, with no thought for how this practice makes it completely unsafe for anybody to invest in their countries' economies.

Perhaps it would be more productive for potential investors to buy out these strongmen, giving them the money to move somewhere nice and retire, than to continue the political and diplomatic efforts which have so far almost always failed to persuade them to change their ways.

Then again, politically incorrect as it is to say so, some national/cultural mindsets are just plain economically counterproductive to a tragic degree, such that the only way their lot is ever likely to improve is if some advanced country puts them under colonial rule for a century or two. It's too bad that the current state of weapons tech makes doing so unaffordable. Maybe in another century that will change again.