Thursday, August 9, 2012

Chapter 2 - Theories that Don't Work

Three theories of development are offered, described and rejected in this chapter as valid explanations for world income/wealth inequality.

Geography Hypothesis

Culture Hypothesis

Ignorance Hypothesis

The first considers differing climate and factor endowments with particular attention to the view of Jared Diamond regarding initial plant and animal endowments.

The second is one that considers culture as a set of social norms and conventions and as such would seem to be a part of institutional analysis of change. Culture as manifest in religion and nationalism are rejected as useful explanations for change.

The final theory is considered and presented as the most dangerous of explanations. If only the "right" leader or elites can control society, then the ignorance of proper development policy can be overcome.

After reviewing these theories the chapter concludes with a call for economics to "understand how different types of policies and social arrangements affect economic incentives and behavior." (69)

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