April 25, 2008
Political Economy Lessons for the World Bank
Arnold KlingSome major league teachers. Nobel Laureate Douglass North writes,
Our political history emphasizes modifications to natural state institutions in the 18th century that led to concern within the elite that political competition would inevitably lead to consolidated political control by a faction who maintained control through manipulation of the economy. Ultimately, elites moved to protect their rights through institutions that guaranteed open economic and political competition by allowing the formation of economic and political organizations at will, something the world had never seen before.
For the most part, the article reprises the thinking I described in Iraq's Natural State. UPDATE: Try this link.
See also contributions by Dani Rodrik and Daron Acemoglu. Daron disses industrial policy, but Dani does not rise to its defense.
Pointer from Tyler Cowen.
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