Understanding The World Poverty Dilemma

The international community has grown accustomed to the fact that economic growth between countries and regions will always be unequal, yet it is more and more uneasy with the “gap” in average incomes between rich and poor countries. That gap also bodes only embarrassment for the proponents of globalization.

So, they would rather stress a diminution of the “proportion” of the world poor. Indeed, they remind us at every opportunity that, contrary to the claims of the alter-globalizers, the world economic situation has never been so good, because world poverty is retreating. The issue as to whether or not world poverty is decreasing or increasing must now be put in the proper perspective, if we do not want to see it buried in linguistic conundrums.

Effectively, in some quarters where globalization is loved, it is repeatedly claimed that, according to the weighted average income per head figures of recent dates, the proportion of poor people in the world has decreased since the 1970s. That is, the individuals who claim that poverty has decreased by a certain percentage are the same ones who first gave poverty its arbitrary definition. The World Bank, for its part, computes a lower reduction but, by and large, supports that assertion. Although, in its World Development Report 2000/2001 , the Bank also maintains that income per head in poor and rich countries has diverged significantly during the last thirty years.

The two statements appear contradictory, but they need not be. Let us first note that the proportion of poor may decrease, while the absolute number of poor people may increase, just as the overall weighted average of a distribution may improve, while the gap between cohorts may deteriorate. In the second place, let us ask, how is poverty defined, and who determines the cut-off point in the distribution? That is, who decides that below such and such level of income, one is poor? If a poor person is officially defined as one who earns $2 a day or less, then a $3 dollar-a-day person is not poor according to official statistics, though that person may be poor in the eyes of the world. Considerations such as these and the way the Asian statistics are interpreted must be borne in mind before one can even begin to gauge the validity of these claims.

Asia has the largest share of the world’s poor people, and China and India have the largest populations in Asia. Both have registered impressive rates of economic growth lately. Any increases in average income in these two countries, no matter how small, are bound to decrease the proportion of poor as defined, but this does prevent the gap in income between say North and South Asia from increasing. Elsewhere, the story is the same. The average income in the US is now 1,900 percent that of Sub-Sahara Africa, but it was much smaller in 1900 or 1970. The 24 Middle East and North African countries, as a group, account for 7.5 percent of the total world population, but the region generates only 2.6 percent of world income. Moreover, within the same region, income per head in 2002 varies from $350 in Mauritania to $27,000 in Qatar. Our main concern is precisely these diverging trends, hence we should not get bogged down in any lengthy discussion of what percentage the poor represent and risk losing sight of them. These diverging trends concern two other groups even more, that is, the victims of poverty (for practical reasons), and the development experts (for theoretical reasons).

One may think that the gap in incomes between rich and poor countries and regions is only one imperfect and unimportant indicator. The late A. W. Lewis is reported to have said: “Since I think what matters is the absolute progress of poor countries and not the size of the gap, I do not care.” That was pure myopia, because now there are gaps everywhere one cares to look, in attitude, health, education, and even in terms of equipment and technology in use. Those that concern themselves with the economics of under-development summarize these disparities by a single word: poverty. Casual observers may, once again, coax a one-dimensional-indicator out of the word poverty, but the development experts know exactly what they are up to, poverty is their old enemy. They are also well aware that the expression, “declaring war on poverty,” is only a useful metaphor, because poverty can never be eliminated completely.

As “absolute” poverty retreats, “relative” poverty seems to increase. It is not farfetched, however, to say that they are fighting a sort of guerrilla war, a war that may well be un-winnable unless they can at least identify the root causes of poverty. Thus, for them, expressions such “persistent poverty” and “divergent trends” are only reminders of a heretofore failed research programme. Incidentally, they also know that significant and systematic redistribution would be a powerful weapon against the old enemy, but it is both difficult and conflictive a weapon to use. The easiest way of fighting poverty, they reckon, is come up with a theory that at least could explain its underlying cause or causes. Alas, such a theory still remains elusive. During the last fifty years or so, pseudo-theories have come and gone, leaving all those concerned somewhat without a theoretical consensus and, of course, powerless to deal a blow to the enemy. Only by rapidly retracing their steps can we begin to understand why they have met with so little success in the fight against poverty.

Fifty years ago, development experts had lots of faith in mathematical models. A model is a mathematical structure, built by mathematicians and scientists, which mimics a process that they want to study. During the 1950s, two main models of economic development were competing for their favor. That is, the “unfettered international trade” model of Paul Samuelson and the so-called “two-gap” model. However, the light these models were supposed to shine on poverty somehow never emerges, being scattered, it seems, by too many counter examples and naïve assumptions.

Let us first consider the Samuelson’s model, which is nothing but a second restatement of a 19th century doctrine. It simply asserts, more forcefully perhaps, that— not fair but— “unfettered” international trade should benefit all nations. That is, they all should benefit from unfettered trade if competition is perfect, meaning the equalization of prices and wages, the absence of governments and associated costs, etc. This is model had always had difficulty finding application on planet earth. The US, its present-day champion, rejects it now and rejected it then, as did all present-day rich countries. Indeed, all of these countries used tariff barriers, industrial subsidies, nationalized infrastructure investment, free public service, and national competition to develop their industrial strength. Put differently, they all claimed to subscribe to the dictates of the model, but they always did the exact opposite of what it recommends. Moreover, the few (such as Argentina, New Zealand or Russia) that have recently attempted to apply it have ended up feeling sorry for themselves before making a hasty retreat. So, other poor countries remain justifiably doubtful as of its predicted outcomes and deeply suspicious of the intent of its proponents.

As far as the two-gap model is concerned, its prescriptions are equally simple and categorical. And as late as the 1960s, professors of economic development were pushing them with confidence. Two basic shortages underlie the under-development tragedy, they told us: investment capital and foreign exchanges. Accordingly, if poor countries could only get their hands on enough capital and hard currencies, they would catch up with the richer ones. While searching for refinements, students spent countless hours reading the then development-icons, such as H. Chenery, A. W. Lewis, F. Perroux, G. Haberler, H. Myint, among others. Thus, that model and its appendages, then viewed as both an alternative to unfettered trade and as the new gospel, guided policy in Latin-America until they became obsolete, leaving the then development experts without a shred of credibility, and poor countries in Latin-America with a mountain of debt in petro-dollars, failed development projects, and rusty equipment.

Disappointed by these outcomes, theorists renewed their search for a more palatable explanation, relying either on the old geography hypothesis or lately on an audaciously simplistic one thought out by Douglass North (1990). Accordingly, the root cause of poverty resided either in geography or in institutions (see also Acemoglu, 2003). Let us therefore take a few moments to see why they thought so.

According to the Geography Hypothesis (GH), tropical countries are poor, temperate zone countries are rich, because climate and ecology determine the motivation of the citizens of a given society as well as their living standard. In other words, the environment completely determines the wealth or the poverty of nations. The problem with GH is that, in retrospect, it appears unconvincing at once. Suppose there were some biological evidence to the effect that high heat and humidity as well as high levels of tropical diseases reduce human productivity to insignificance. Suppose further that all countries within the zone defined by, say 30º latitude above and below the equator, were poor, while all others located in more temperate zones were rich, GH still would not be compelling. The reason is that long ago the use of machines would have neutralized the impacts of high heat and humidity, and pharmacological advances would have just reduced the incidence of diseases. In short, high capital-labor ratios would now be driving economic development in the tropical zone, in particular in the oil-producing countries rich in cash. But, this is not what is observed. In fact, some 50 years of experience seem to demonstrate that high-capital ratio is more the result of advances in incomes rather than being their determining factor, as capital is a residual. The failure of the two-gap model has already attested to that.

The Institutional Hypothesis (IH), on the other hand, maintains that rich societies are those that are endowed with institutions promoting capital investment and investment in humans. Put slightly differently, IH stresses once again the importance of capital, but for capital to do the trick, it needs “good” institutions. By good, proponents mean the existence of two main sets of laws, that is, laws guaranteeing private property rights and the freedom to invest in any sector of the economy, and laws deterring corruption. European colonists are then credited with the implantation of such institutions from the 15th century onwards. So, the proponents of that hypothesis would want us to believe that poverty should be absent wherever Europeans had been the administrative powers.

Choosing between the two presented a problem because the power of either hypothesis was never easy to test. On the one hand, not all non-European, temperate-zone countries are rich. On the other, beside Ethiopia, no one can think of a poor tropical country that has not come under the yoke of colonization. In fact, in the case of tropical countries, it would seem that the two hypotheses were in direct competition, while they should have reinforced each other in the temperate zone. This means that to test the power of IH, one had to hold climate constant by finding a sample of tropical countries that were poor before, and became rich after colonization. But, none could be found. In fact, it was easier to find counter-examples of IH. That is, Aztec and Inca societies are located in the tropical zone, they were rich before colonization, and now they are poor by any definition of poverty. To test the power of GH, on the other hand, one needed a sample of temperate-zone, non-European, countries that were not only rich but that were never colonized by Europeans. Canada, Australia, and New Zealand could not do, because Europeans have settled there for good; in addition, all three benefited a great deal from the open-door policy of the rich countries as well as from the bulk of direct foreign investment during the early part of the 20th century. Ironically, in the case of GH too, it was easier to find counter-examples. For example, Mongolia is within the temperate zone, was never colonized by Europeans, but rather by China during the periods of 1691–1911 and 1919–1921; but Mongolia is now considered poor. The cases of China and Turkey are two more counter-examples. The Mongols colonized China in the 13th century, and most of Chinese territory is within the temperate zone, but China is considered poor, at least until now. Turkey too is located in the right zone, has escaped colonization by Europeans, but is poor. Thus, on the one hand, the proposition: “all tropical countries that were poor before colonization have become rich after colonization,” was falsified by countless examples. The alternative proposition: “all temperate-zone, non-European countries that were never colonized by Europeans are rich,” was also falsified by the cases of China, Mongolia, and Turkey.

In reality, that result should not have surprised anyone. Climate does not make a tightly sealed case, anyway, because if it were, poor countries would have solved their problem with massive injections of capital; that is to say that no tropical oil-producing country would now be poor. On the other hand, capitalistic institutions should not be seen as a panacea either. For, if European institutions were the main determinant of economic development, why would not all developing countries enthusiastically adopt them by now? Indeed, many empirical studies have attempted to find a strong link between income per head and the quality of institutions (see Rodrik, Subramanian, and Trebbi, 2002). However, I do not find them too convincing. I think that even if these variables could be meaningfully measured, they would show no more than correlations. Beside, what institutions are we talking about? Institutions established by the colons in countries where they did not intend to stay were all exploitative ones, such as slavery, forced labor, laws against the education of the natives, and what have you. Beside, the poverty of native peoples in Canada, New Zealand, South Africa, and Australia says a lot about these “good” institutions.

Thus, theories developed during the last 50 years or so might have failed to explain convincingly, but theorists have not, nor do they intend to give up, because there is nothing more frustrating to them than being unable to explain persistent observations. They had, in the meantime, probed different avenues. At one point, they had even attempted to define poverty only in terms of indicators. That is, poverty meant the lack of hygiene, poverty meant the lack of water, and poverty meant this or that. But they could never escape the lingering question: why poverty?

Parallel to these theoretical efforts, Southern governments that were looking for a practical way out since World War II ended began relying more and more on international organizations and Northern governments for assistance during the period 1970–1980. But, by the 1980s, Northern governments were grappling with their own problems, that is, currency realignment and inflation. In the 1980s also, the International Monetary Fund (IMF) was about to become obsolete, though it remained rich and vaguely chartered. Under the aegis of the US, the few rich countries that control the IMF found it easier to change its mandate, ordering it to reform poor countries structurally. Did that new orientation do the trick? No. In fact, by 1989, structural reforms had only succeeded in devastating quite a number of poor countries’ economies, leaving then riddled with foreign debt in addition. An alarm bell rang, signaling the urgent need for yet a new approach.

Under the impulsion of ideologues in the Reagan and Thatcher administrations, the so-called Washington Consensus (WC)—read globalization— was then presented, if not as a theory but at least as the ultimate practical solution. John Williamson, then an economist at the World Bank, who coined the term WC, defined it as “the lowest common denominator of policy advice being offered by the IMF and World Bank to Latin-America.” At first, the ideologues presented the WC as an average standard for Latin-America. But, their reasoning was that, if it were successful in Latin-America, there would be no reason to limit it to that geographical area. But unforeseen events seemed to have pressed them. For, even before any obvious success could have been acknowledged, the WC was extended to New Zealand. Shortly thereafter, it was turned into a grandiose scheme, encapsulating 10 propositions, thought to be applicable to both developed and under-developed countries. In other words, at the outset, the WC was mainly concerned with fiscal discipline and supply-tax reform. But after ideologues from think-tanks, multinational firms, and the corporate media had gotten into the act, it came to assume the ejection of governments from economic activities, the liberalization of all markets (labor and capital in particular), all-encompassing patent rights, and the “commodification” of all human activities. Thus, in a few short years, the status of the WC went from “fiscal discipline” to “unfettered market fundamentalism”. That meant that, frustrated by the lack of progress on the theoretical front, governments and ideologues had then turned toward a one size fit-all policy, bearing the imprimatur of the US, the self-proclaimed champion of unfettered markets and trade.

That new discourse on policy advice seemed not only to have missed the main lessons of history, but its proponents appeared to have been too optimistic, to say the least. Yet, leaders of both North and South fell for it, pretending to see it as an inevitable climax of human history that has the potential to do for the rest of the world what it supposedly had already done for the US. The reality is that in less than 10 years since the inception of the WC, instead of keeping the promises of a modern version of manifest destiny, it has in fact produced the biggest ever bubble in the history of capitalism and the worst corporate scandal in its own heartland. Elsewhere, in Asia, for example, it gave rise to the worst meltdowns ever known, except in China where the WC had not completely taken root. In the rest of the under-developed South, countries there ended up with an unprecedented rise in poverty, a significant degradation of their habitats, and $1.0 trillion increase in their foreign debt.

The language of the WC was indeed seductive. It was all about democracy, unfettered trade, and the sharing of the benefits of technology. In reality, it was rather about rules by the elite, mercantilism, selfishness, and the attempt of a few individuals in the rich nations to control even a greater proportion of world’s resources. By pushing the WC as forcefully as they did shows that they were becoming increasingly ruthless to retain that control, as world resources thin out, pollution increases, and the number of hungry people multiplies.

The error here was everyone’s. The South confused a strategy (a plan of action) with a practical solution, or worse, with a scientific explanation. As is made clear in a recent book (Dominique, 2003), trade, being a natural activity, requires fairness rather than a sophisticated framework to be implemented. The error of both pundits and ideologues in the North was to attempt to transfer, in extenso, the property of naturalness of trade to unfettered markets, forgetting that markets are instead mere social constructs. A social construct as such can never be unfettered; the above results were of course to be expected.

The WC is now moribund, being rejected by all its early victims, such as Malaysia, Thailand, South Korea, Argentina, etc. The IMF and The World Trade Organization (WTO), its main enforcers, are discredited, and the World Bank has retreated behind more human mantras such as the Comprehensive Development Framework (CDF) and the Get Growth Going (GGG) posture. Just prior to the meetings of the WTO in Cancun, Mexico, the rich countries made a last ditch effort to convince the poor ones that they, the rich, had at last found the answer to the problem of poverty. As they put it: protection is equal to stagnation and poverty, while unfettered international trade is equal to growth and prosperity. But this time, the poor ones quickly realized that they were being taken for another ride around a circle. Twenty-two of them unhesitatingly rejected this new “Greek” gift, causing the rich boys to regroup, while preparing a new attack.

As a robust explanation of poverty remains elusive, poverty itself continues on its rampage. My feeling is that lots of factors play a role in that explanation, but they do not lend themselves to quantification or modeling. Common sense and experience are more useful in such circumstances. For they seem to be telling us quite clearly that a country that does not have navigable rivers or ports should be at a disadvantage to integrate the world trading system. A poor former colony, where some 80 percent of the population are suffering either from malaria, tuberculosis, Aids, and malnutrition, etc., or from a combination thereof, is likely to have low labor productivity. A country where the vast majority of the people are illiterate and oppressed by the local oligarchy is likely to be poor. A country where a minimum freedom of action is not permitted, or a country ravaged by corruption, is unlikely to head the list of prosperous countries, even if it is located in the temperate zone or is endowed with capitalistic laws. There must also be other important factors that these theories never accounted for. For example, deliberate sabotage by a powerful neighbor may keep a little country isolated and poor. Finally, it would be naïve to ignore the negative impact of a “bad attitude”. By this, I mean an obsessive focus on the “me-me-first” rather than on “us” as one entity. These factors may not be easily quantifiable, but common sense and experience tell us that many, if not all of them, seem to be prevalent in any poor society.

In that connection, consider a study carried out by the International Monetary Fund (IMF, October 2000: 113). It shows that, for all income groups, the lower the adult illiteracy rate, and the lower the infant mortality rate, the richer is the country. Of course, the study does not demonstrate causation, and clearly good health and education may not suffice in the presence of negative outside-interference, as demonstrated by the case of Cuba. However, one thing seems to stand out. Factors that are compatible with economic development constitute a mixed bag. Their individual contribution and their synergistic impacts are unknown. But, again common sense seems to show that good institutions are the product of an educated citizenry, that a country can not progress when its population is being ravaged by diseases, or when it is being oppressed by a powerful and retrograde oligarchy, or even when the will to go forward is non existent.

Also, the concept of being rich or poor is relative. A country may rich today and poor tomorrow. For example, both Russia and Argentina were by all measures rich countries in 1900, and they are considered poor today. In purchasing power parity and in constant 1990 dollars, Japan had a GDP per capita of $1,135 in 1900. It was not very poor but not very rich either. Yet, it is among the richest with $20,616 in 2000. Taiwan, Province of China, had $759 in 1900, and is among the richest in 2000 with GDP per capita of $16,854 (IMF, May 2000:157). So, it would seem that to health and education, one should add good policy, peace, and the right attitude. As already noted, these factors may be difficult to quantify, but they seem to convey unmistakably a major viewpoint: That the poverty problem derives first and foremost from human behavior.

To see why I think so, let me stress an inherent impediment and quickly go over another set of policy designs that I believe stand to increase poverty in the future.

(a) As is well known, capitalism can release people’s energies and talents, but it is characterized by booms and busts due to people’s greed and irrational (or herd) behavior. Booms reduce unemployment and absolute poverty, but increase relative poverty. Busts, on the other hand, increase absolute poverty, unless mitigated by stabilization policies. However, at this juncture, the North happens to be enamored with the unfettered version of capitalism that, among other things, makes two demands on countries: Both North and South must drop all forms of stabilization policies, and the South must specialize completely in low-skill-intensive production, according to the principle of relative comparative advantage. There lies the problem. Busts and the absence of stabilization policy will increase poverty among unskilled workers in the North, while the reduction of raw material exports that come with busts increases poverty in the South; the specialization in low-skill-intensive production does the same, as it implies immiserazing wage levels.

(b) In July 2003, the World Meteorological Organization announced that the increase in temperature of the geo-system (earth surface and the atmosphere) in the 20th century is likely to have been the largest in any century during the past 1,000 years. That is to say that anthropogenic inputs to our geo-system will prove to be a huge poverty-causing factor, as global warming stands to shift the location of agricultural production, leaving only cactuses in the tropical zone.

(c) Also in 2003, the rich countries gave in subsidies some $327 billion to their big corporate farmers, allowing them to sell these products below costs, and shutting out of world’s markets millions of poor ones, mainly from the South.
(d) At the Cancun meetings, the same rich countries attempted to tag on the “Development Round” the so-called intellectual property rights rules (TRIPS). Through it, multinationals, universities, and individuals from the North intend to patent and control everything constituting the livelihood of the poor. I am told that they have already taken out some 70 patents on the properties of the Neem tree, maize, rice, potato, wheat, sorghum, cassava, coffee, cotton, cabbage, melon, peas, cauliflower, pepper, etc. By creating huge monopolies to control these items, TRIPS stand to deprive the poor of both food and life-saving drugs.

(e) We are all familiar with the statistic of some 2 billion people living below $2.0 a day. But there is a lesser known one that is more revealing. It shows that 1 billion people, or one sixth of the world population, live in squalid, unhealthy areas, without water, sanitation, public services, and legal security. According to a recent UN report, one in every three people in the world will live in a slum within 30 years, unless governments control the unprecedented urban growth. But instead, multinationals advise Southern governments to just privatize water, electricity and other services, although there is no empirical evidence to show that private control has delivered better outcomes than the era of capital control and government intervention.

(f) Recently, the world’s only superpower, supported by about a dozen opportunistic and sycophantic governments, switched to a war-mode, believing somehow that economic siege, bombardment and invasion of Southern nations are ways of maintaining the iron-fisted control of resources by a handful of Northern multinationals. In reality, such pursuits create poverty in the short and longer run by destroying public assets, institutions and human pride and dignity.

(g) Southern politicians, already so ill-prepared to tackle the problem of poverty reduction, are frightened to death into signing their sovereignty away through unilateral trade deals in exchange for the permission to export primary products to rich markets. The rush to export the same primary products depresses their prices and reduces incomes, as say the 25 million Southern coffee producers have experienced recently. On the other hand, the loss of sovereignty means lost opportunity to devise a coherent development plan, precarious dependency, and the obligation to dance to the tunes called by multinationals.

I could find numerous other examples, such as toxic pollution, deforestation, over-fishing, and the vast sums spent on armament, and so on, but these suffice to show what poverty is and how our behavior and bad policy are driving it.

The poor countries might not be in a position to eliminate poverty, but I know that they want to reduce or at least contain it. In their search for a way out, they should, however, keep a few facts in mind. That is, unfettered international trade has not helped any country to eliminate poverty. In fact, poorly planned and badly sequenced trade liberalization can be economically disastrous, as shown by numerous cases ranging from Mexico to Argentina and from Ghana to Russia. And trade liberalization follows economic growth and strength, as shown in the case of the Asian tigers, and increasingly so in the cases of China and India. As for the theorists pursuing their search for that elusive theory of development, they would do well to pay heed to the recent advice of the Fabian Society as regards a system of global governance. It is based on four pillars, namely, equitable trade, efficient economic regulation, global redistribution, and democratic governance.

I believe that past experience and these four pillars should guide the development of a reasonable programme of action against poverty. I have dwelled on our experience with policy advice and I have alluded to the fact that corruption, the lack of freedom of action, and oppressive oligarchies are serious impediments to poverty reduction. In this sense, democratic governance is a necessary first step.

In the same vein, we all should bear in mind that both markets and the concept of equity underlie trade. Trade, as a human activity, is as old as human societies themselves. In fact, trade is so old that its origin can not even be dated, but it has always gone hand in hand with the notion of “reciprocity”. Therefore, the idea that trade should be equitable to be sustainable is not new. In sum, trade is of the essence, but long ago, it has been recognized that, though natural, trade could not really flourish if it were devoid of equity, while markets are social organizations designed to make trade more efficient. And, as already noted, no social constructs can be without rules. In the case of markets, they tend to distribute the gain of trade according to the market power of the participants; if left unfettered, they would produce more un-desirable than desirable outcomes. In this sense, the first two pillars, mentioned by the Fabian Society, are naturally linked. Equity and market are supporting appendages of trade, thereby reinforcing each other in making for a sustainable economic system.

I have also alluded to the difficulty of significant and systematic redistribution, but this does not mean that redistribution in any form should be proscribed. If indeed poverty is man-made, then some form of redistribution should be an effective and straightforward way of fighting it. It so appears to me that at this juncture, the least painful form of redistribution that I can think of is a “Tobin tax”. The World Bank estimates that an additional $100 a year in aid would be needed to meet the UN’s “millennium” goals of health and education improvement, and poverty reduction in the South by 2015. In that connection, past experience shows that poor countries can not count on the generosity of rich nations to meet these goals. On the other hand, according to the Bank of International Settlements and the European Commission, a negligible Tobin tax of 0.1 percent on cross-border currency transactions would raise some $8.22 billion a day, or $3 trillion per year, on a daily total flow as low as $822 billion a day. Even one half of that amount would be sufficient to meet the UN’s goals and more. Dominique (2003: 227) has shown how that tax could be collected even without the participation of every jurisdiction.

When all is said, the conclusion is that world poverty is driven by bad attitude, fear and bad policies. To mitigate it, the Southern elite will need more confidence in its own ability to succeed, a greater Southern solidarity to face up to the imperialistic design of the North and, of course, more appropriate policies. All of these happen to be within its power.

References :
Acemoglu, Daron, “Causes profondes de la pauvreté.” Finances et Développement , 40, June 2003: 27–31.

Acemoglu, D., S. Johnson et al., “Colonial Origins of Comparative Development: An Empirical Investiga tion.” American Economic Review , 91 (December, 2001): 1369–1401.
Dominique, C-R., Markets in the Looking Glass , iUniverse, inc., 2003.

International Monetary Fund, World Economic Outlook , May 2000: 157.

International Monetary Fund, World Economic Outlook , October 2000: 113.

North, Douglass, Institutions, Institutional Change and Economic Performance , Cambridge University Press, New York, 1990.

Rodrik, D., A. Subramanian, and F. Trebbi, “Institutions Rule: The Primacy of Institutions over Geography and Integration in Economic Development.” NBER Working Paper 9305, October 2002 (Cambridge, MA:National Bureau of Economic Research).

  • The author is a former Professor of Economics
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