I look forward to our discussion of an assertion made by the authors early in the chapter:
". . .sustained growth requires technological change,"(124)
While this is an intutively attractive cause/effect relation, I wonder to what extent has it been reflected in the literature and in empirical work. That is, the Solow model of growth, Romer's growth model and other models assign differing weights to the role of technology in the complex process of change. So, I wonder to what extent this assertion is useful.
That said, the discussion of growth under extractive institutions is very helpful for understanding the hurdles faced when a society facing transition. There are a number of players in extractive societies that do in fact earn rents and, in the short run, provide some level of growth to the entire society. "Extractive institutions are so common in history because they have a powerful logic: they can generate some limited prosperity while at the same time distributing it into the hands of a small elite. For this growth to happen, there must be political centralization."(149)
So, here is a dilemna, previous the authors argue that some degree of political centralization is necessary for the development of inclusive institutions. But here, in chapter 5, they recognize that political centralization is necessary for extractive institutions to emerge and persist. Is it a matter of degree? That is, how does the "proper" level of centralization emerge and persist?
On page 131 the authors further assert: "It [growth] had been done by government command, which could solve some basic economic problems."
I have an issue with the idea that any systme can "solve" problems. Economic systems set up incentives that motivate activity that can address problems, create problems and provide alternatives to existing responses to problems.
That said, I would have liked to know which economic problems are solved by command economic systems.
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