Institutions, Integration, and Geography: In Search of the Deep Determinants of Economic Growth

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The spectacular gap in incomes that separates the world's rich and poor nations is the central economic fact of our time. Average income in Sierra Leone, which is the poorest country in the world for which we have data, is almost 100 times lower than that in Luxembourg, the world's richest country. Nearly two–thirds of the world's population lives in countries where average income is only one–tenth the U.S. level. Since the starting points for all these countries were not so far apart prior to the industrial revolution, these disparities must be attributed almost entirely to differences in long–term growth rates of per–capita income. The world is split sharply between countries that have managed to sustain economic growth over long periods of time and those that have not. How do we make sense of this?

Last updated on 03/24/2015