(highlight:: At current rates of growth, living standards in the poorest countries in the world will eventually catch up to the United States — in about 700 years.
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If we could identify what caused South Korea’s takeoff, we might be able to make the miraculous seem routine, and see more countries catch up over decades and not centuries.)
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(highlight:: n a famous and widely cited study, Greg Mankiw, David Romer and David Weil looked at how the accumulation of both factors was associated with economic growth.
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Countries that allocated a large share of GDP toward producing new physical capital or had high levels of secondary school enrollment tended to grow faster than others. In addition, countries with lower population growth rates tended to grow faster, as they were able to equip each worker with more physical capital, raising their productivity.)
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Young, however, attributed even more power to the changes in human capital. In each of the four countries, he found that families were having fewer children and investing more in their education. Increases in educational attainment created a more skilled workforce — an impact which Young was able to track in more detail than Mankiw, Romer and Weil. Their slower population growth was associated with increased labor force participation by women and an increase in the share of the population that was of working age.
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These authors and the literature that followed them tended to find that things like robust property rights for individuals and governments with clear restraints on executive power, democratic political processes and a lack of government corruption were all associated with economic growth.Those institutions certainly sound “right.” They are things we’d associate with almost any major developed country like the U.S., France or Germany. But, at heart, most of these studies share the same fundamental issue as those that looked at capital accumulation: Just because certain institutions are present in places that had rapid economic growth, that doesn’t mean they were necessary for the miracle to occur. Perhaps things like property rights and a lack of corruption are “luxury goods” that rich countries can afford to indulge in but are not, in fact, the reason those countries became rich?
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These studies don’t tell us about the immediate effect of any of these institutions. The British Raj ended decades ago, the Spanish forced-labor system in Peru ended over two centuries ago, and the historical political organization of sub-Saharan Africa are just that — historical. What we learn from these studies is that institutions can have persistent effects well after the institution disappears, implying that countries or regions can get stuck in a poverty trap. Once the region is impoverished, it’s more likely to stay poor.
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For them, countries stagnate at low levels of development because there is a stalemate among interest groups; despite the aggregate benefit, no group is willing to implement an improved set of institutions.What their research suggests is that breaking out of that stalemate requires a fundamental expansion of the distribution of economic and political power within a country. By incorporating more people in economic and political decision-making, they argue, a country is better able to negotiate a set of economic institutions that promote economic development.
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- [note::The point about "stalemate among interest groups" sounds like America lol.
"despite the aggregate benefit"... (to whom?)]

(highlight:: A good example is from Acemoglu and Robinson along with coauthors Suresh Naidu and Pascual Restrepo.
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They show that the transition to democracy leads to higher economic growth in the future, finding GDP per capita is around 20% higher in a democracy compared to an otherwise identical nondemocracy. What they see is that countries that democratize invest significantly more in public health and education, consistent with the initial work that Mankiw, Romer and Weil and Alwyn Young did on economic growth.)
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- [note::"Democracy" seems pretty vague here. Is this effect present for any particular types of democracy? Based on this, is there a good argument to be made for increasing investment in advocacy for alternative voting methods?]

This result is exciting, in part because it suggests that something inherently positive — wider representation and democracy — is also conducive to economic growth. But it doesn’t mean we’ve cracked the code and are capable of generating economic miracles at will. Countries that do expand the distribution of political and economic power still have to negotiate the institutions supporting growth. This is where our expanding knowledge of which institutions don’t work becomes valuable, helping eliminate dead ends.
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At this point the situation may seem rather grim. Can we say, with any confidence, that we know the set of policies or institutions that can create the rapid economic growth seen in South Korea and others? The frank answer is no.But this does not mean we are at a complete loss. Do not dismiss the power of the cautionary tales I mentioned. While the Korean “experiment” didn’t tell us what exactly South Korea did right, it continues to provide a vivid lesson that the North Korean centrally-planned authoritarian regime was not a viable economic path to take. Documenting which institutions don’t work is slow, but it is progress nonetheless.
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