Tuesday, November 24, 2009

Why Remodel Your Kitchen If You Might Not Keep Your House?

The connection between law and development:
Daron Acemoglu describes what makes a nation rich in a new article for Esquire. According to Acemoglu, experts who believe geography or the weather or technology are to blame for persistent poverty are missing a much simpler economic explanation: people respond to incentives. “People need incentives to invest and prosper; they need to know that if they work hard, they can make money and actually keep that money,” he writes. “And the key to ensuring those incentives is sound institutions — the rule of law and security and a governing system that offers opportunities to achieve and innovate.” In other words, if you want to fix poverty, you’ll have to fix governments first.
Wanting to better understand this connection between institutions and economic development is the primary reason I ended up in law school after starting my PhD.

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