Question

What are the two principal reasons that economic inequality between countries exists today in the world, according to Acemoglu and Robinson in "Development Reversed"? Do you agree with their assessment (why or why not)? 500 words

Answer 1

• The roots of discontent and economic inequality in these countries lie in their poverty.  These countries are poor precisely because it has been ruled by a narrow elite that have organized society for their own benefit at the expense of the vast mass of people. Political power has been narrowly concentrated, and has been used to create great wealth for those who possess it.
• Countries such as Great Britain and the United States became rich because their citizens overthrew the elites who controlled power and created a society where political rights were much more broadly distributed, where the government was accountable and responsive to citizens, and where the great mass of people could take advantage of economic opportunities.
• The industrial revolution that took place never reached these poor countries like Egypt,Zimbabwe etc.Thes poor countries because of lack of economic and political development have remained poor and suffering from corruption,oppression and bad education has made conditions even worse leading to inqualities and poverty. I do agree with their assessments,the governments of many poor countries have not been able to provide basic public services to its people,and even equal employment opportunities leading to economic inequalities. And yes political structure,as discussed by the authors is another major reason for the lack of development.
• New technologies are extremely disruptive. They sweep aside old business models and make existing skills and organizations obsolete. They redistribute not just income and wealth but also political power. This gives elites a big incentive to try to stop the march of progress. Good for them, but not for society.As Britain and the United States grew rapidly, however, Austria and Russia failed to do so.
  
• In the 1840s, tiny Britain was undergoing a railway mania in which more than 6,000 miles of track were built, while only one railway ran in vast continental Russia. Even this line was not built for the benefit of the Russian people.
• When elites control an economy, they often use their power to create monopolies and block the entry of new people and firms. This was exactly how Egypt worked for three decades under Hosni Mubarak. The big businessmen were known as the “whales.” Their stranglehold on the economy created fabulous profits for regime insiders, but blocked opportunities for the vast mass of Egyptians to move out of poverty.