Chapter 9: Making Policy Work: A Road Map for Future Growth
9.1 WHAT HAVE WE LEARNED SO FAR? Part I of this book focuses on the historical determinants of long-run economic development. In Chapter 2, I document wide variations in growth rates and living standards across countries over the post-war period. The key questions, however, are what explains this variation and what explains its persistence. Looking further back, I document that this variation is not just attributable to how countries performed over the post-war period but also from the start of the sixteenth century. Some countries diverged from the rest in terms of living standards starting from that period. Chapter 2 presents a detailed account of this process of divergence and the data involved. In Chapter 3, I present some of the existing theories explaining this divergence. I present a case for exploring the root causes. I also review theories of institutions, geography, human capital, trade, religion and culture, and state formation and war. Chapter 4 presents evidence and illustrates the difficulties in quantifying the relationships between root causes and economic development. It also shows that the empirical results are strikingly different in Africa compared to the rest of the world. Diseases (malaria, in particular) are the only significant explanator of economic development in Africa. All other variables including institutions are statistically insignificant. This is, however, not the case in a more general sample where both malaria and institutions are important for development. Chapter 5 makes an attempt to relate these empirical results to economic history. Empirical results are in reduced...
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