Über die Autorinnen und Autoren

Auszug. © Genehmigter Nachdruck. Alle Rechte vorbehalten.

MAKING POOR NATIONS RICH

Stanford University Press

Contents

List of Illustrations...............................................................................................................................................................................viiForeword Deepak Lal................................................................................................................................................................................xiContributors........................................................................................................................................................................................xixAcknowledgments.....................................................................................................................................................................................xxiii1 Introduction Benjamin Powell....................................................................................................................................................................1PART I Institutions and Entrepreneurship2 Big Bills Left on the Sidewalk: Why Some Nations Are Rich, and Others Poor Mancur Olson Jr......................................................................................................253 Entrepreneurship and Economic Growth Randall G. Holcombe........................................................................................................................................544 Entrepreneurship: Productive, Unproductive, and Destructive William J. Baumol...................................................................................................................795 Economic Freedom and Property Rights: The Institutional Environment of Productive Entrepreneurship Robert A. Lawson.............................................................................112PART II Failures in Entrepreneurial Development6 The African Development Conundrum George B. N. Ayittey..........................................................................................................................................1377 The Case of Latin America Alvaro Vargas Llosa...................................................................................................................................................1898 Entrepreneurship or Entremanureship? Digging Through Romania's Institutional Environment for Transition Lessons Peter J. Boettke, Christopher J. Coyne, and Peter T. Leeson.....................2239 Sweden's Slowdown: The Impact of Interventionism on Entrepreneurship Dan Johansson..............................................................................................................250PART III Reform and Success in Entrepreneurial Development10 China's March Toward the Market James A. Dorn...................................................................................................................................................28311 India: The Elephant in the Age of Liberation Parth J. Shah and Renuka Sane......................................................................................................................30912 Economic Freedom and Growth: The Case of the Celtic Tiger Benjamin Powell.......................................................................................................................34213 Why Have Kiwis Not Become Tigers? Reforms, Entrepreneurship, and Economic Performance in New Zealand Frederic Sautet............................................................................36414 Look, Botswana: No Hands! Why Botswana's Government Should Let the Economy Steer Itself Scott A. Beaulier.......................................................................................396Index...............................................................................................................................................................................................429

Chapter One

BENJAMIN POWELL

Why do some nations become rich while others remain poor? This has been a central question in economics since at least the time of Adam Smith. China, India, and Botswana are booming and in the process lifting hundreds of millions of people out of wretched poverty, while most of sub-Saharan Africa not only fails to get rich but is instead actually getting poorer.

Traditional mainstream economic growth theory doesn't help us much to answer this question-through most of the twentieth century it focused on models that assumed growth is a simple function of labor, capital, and technology. The new growth theory, of which this book is part, looks more to institutions and policy. How well does a nation protect its entrepreneurs? In what countries do you get rich by inventing a new product, and in what countries do you get rich by wresting control of government from your rivals?

Entrepreneurs drive the market toward efficient outcomes by exploiting profit opportunities and causing the market process to tend toward equilibrium (Kirzner 1973). Entrepreneurs also play a central role in the market's process of creative destruction, whereby new innovations constantly replace old technologies and send the market on a path toward a new equilibrium (Schumpeter 1934). The interaction of these two roles of the entrepreneur drives the process of economic development.

Entrepreneurs exist in almost all cultures and historical contexts. Why, then, doesn't the process of economic development occur in all countries equally? Human decision making responds to perceived costs and benefits, and not all societies have an environment that rewards productive entrepreneurship. Look at the case of imperial China. A brilliant young man would devote all of his energies to studying law in preparation for the exams that gave entrance into the upper echelons of the ruling bureaucracy. That same young man today may study electrical engineering with the dream of one day opening his own firm because now Chinese businessmen can earn greater prestige and profits than they could in the past. In which society should we expect greater economic growth?

In recent years the economics profession and policy world have begun to pay more attention to the institutional environment necessary for economic growth. Geography and other explanations for success have begun to be pushed aside as institutions have become increasingly recognized as the main driver of economic success (Rodrik, Subramanian, and Trebbi 2004). Some in the profession have moved toward detailed analytical narratives to explain individual cases in economic development. There has also been a virtual explosion in research measuring economic freedom and using it to explain economic performance. In Washington, DC, people in policy circles now generally, though incompletely, acknowledge the need for private property rights and the rule of law for economic development.

Making Poor Nations Rich seeks to push the current debate further in the direction of an appreciation for the critical role that entrepreneurs and the institutional environment of private property rights and economic freedom play in economic development. The book begins by collecting the key essays that explain how entrepreneurs create economic growth and why some particular institutional environments encourage more productive entrepreneurship than do others. Part 1 ends with a chapter explaining...