Midterm Flashcards
Great Divergence
Western Europe and parts of North America had become fabulously wealthy. Almost everywhere else was horribly poor. Economic historians refer to this as the “Great Divergence
The GDP increase of the countries due to the industrial revolution
Per Capita GPD
The amount of total value of production in a country divided by the population within that country
Measures the development across countries, while adjusting for population size. It correlates with measure of wellbeings of life expectancy, etc.
Development as Freedom
Amartya Sen → Development occurs when it expands “human capabilities”
Geographic explanations
Geographical explanations examines how government and countries are affected by their location.
Ex: Shipping and transportation more difficult if land-locked
Agriculture less productive + disease burden in tropics
Authors: Jared Diamond, Acemoglu & Robinson
Shortfalls: Does not explain Middle East and Asia and America
Cultural explanations
Cultural explanations and theories prove that poverty and property are cultural
Poverty and prosperity can be explained through cultural traditions
Ex: Some societies have greater levels of trust, reciprocity, and civic mindedness than others
Authors: Max Weber, Robert Putman, Banfield (Italy guy)
Cultural trap: Poor/working class stuck in their class because they are not paid enough; having a work union would have helped
Inclusive institutions
Inclusive institutions theorist argue that countries with ‘inclusive’ political institutions prosper
Ex: Institutions are the man made “rules of the game” which structure social and political behavior
*Investment in public goods like education and infrastructure
Inclusive institutions are those that distribute political power broadly across society for example, democracy
*encouragement of innovation
Authors: Acemoglu & Robinson
Shortfall: Mexico, Greece
Extractive institutions
Countries with ‘extractive’ political institutions stagnate
Ex: Extractive institutions are those that concentrate power in a narrow group of elites–for example, dictatorship
*policies which enrich a narrow elites
*obstruction of threatening innovations
Shortfall: Venezuela
Reversal of fortune
though initially very prosperous, Latin America fell behind Europe and North America
Guns, germs and steel
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Continental axis
Acemoglu and Robinson Allows crops to spread over quickly More domesticated animals Climate is about the same East to West: straight line across to travel without any interference of anything in the way
Resource curse
Engerman & Sokoloff
A country has a lot of resources that then leads for colonization to take resources
Leads to extractive institutions
Ex: Latin America had resource curse and was colonized by Europeans
Industrial revolution
Acemoglu & Robinson
Creative destruction
Joseph Schumpeter
New technologies create wealth, but are economically and politically unstable
Glorious destruction
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Public Goods
Non exclusive, non rivalrous; good for the public
