institutions matter, but not for everything (Sachs) Flashcards
what is the overview of the article “institutions matter, but not for everything” by Jeffrey Sachs?
Jeffrey D. Sachs’ article argues that while institutions are important, economic development also depends on factors like geography, disease, and resource constraints. Poor regions, particularly in sub-Saharan Africa, face challenges like isolation, malaria, and weak infrastructure, requiring direct interventions and international aid. The article advocates a balanced approach that combines institutional reforms with targeted investments to address local barriers and achieve sustainable growth.
how does the author emphasize the geography and environmental challenges?
The section “When economic growth fails” emphasizes that geography and environmental challenges, such as high transport costs and disease, significantly hinder economic development in regions like sub-Saharan Africa. Adam Smith noted that geographic isolation limited trade and market expansion, condemning these areas to poverty. Highlighting malaria’s impact, the text underscores how the disease raises trade and investment costs, further isolating affected regions. These barriers illustrate that economic failures cannot be attributed solely to institutional shortcomings; addressing health and geographic challenges is critical for fostering growth.
how does the author argue that both institutions and geography matter?
The section “When institutions and geography matter” argues that both geography and institutions influence economic development, and neither should be overlooked. Adverse geography—such as being landlocked, having poor soil fertility, or enduring endemic diseases—requires targeted investments, like building infrastructure and combating diseases, to initiate self-sustaining growth.
Regions with favorable geography and strong institutions have prospered, like coastal East Asia, which benefited from integration into global markets. Conversely, poorly governed regions with good geography, such as Central Europe under socialism, highlight the need for institutional reforms. The most disadvantaged regions, like sub-Saharan Africa and Central Asia, face compounded challenges of poor geography and weak institutions, trapping them in poverty.
These regions need international support, as institutional reforms alone cannot overcome geographic disadvantages. Effective development strategies require addressing both institutional and geographical barriers.
how does the author emphasize that development strategies for the poorest regions must address both institutional weaknesses and geographic disadvantages?
The section “Helping the poorest regions” emphasizes that development strategies must address both institutional weaknesses and geographic disadvantages to lift the poorest regions out of poverty. Poverty traps are real, where countries are too poor to attract investment or fund their development needs without external help.
Highlighted points include:
- Millennium Development Goals (MDGs): These provide a framework for tackling poverty, hunger, and child mortality, but many of the poorest countries are off-track and require substantial international support to achieve these targets.
- Increased Aid: Commitments like raising donor aid to 0.7% of GNP could provide the resources needed to break poverty traps, addressing barriers such as disease, infrastructure deficits, and isolation.
- Detailed Interventions: Development efforts must identify and address specific obstacles, including institutional, geographic, and external trade barriers, with tailored plans for each country.
The section calls for combining institutional reforms with targeted investments, donor assistance, and clear developmental goals to help these regions escape economic stagnation.
