Professor discusses state building, economic growth
Lucas Masin-Moyer | Thursday, October 1, 2015
Daron Acemoğlu, professor of economics at Massachusetts Institute of Technology (MIT), delivered the Guillermo O’Donnell Memorial Lecture on Wednesday evening in McCartan Courtroom in the Eck Hall of Law. Acemoğlu’s lecture examined the factors that contribute to effective state building and economic growth, while also considering the causes of disparity in economic development.
“We live in an interconnected, globalized, unified world,” Acemoğlu said. “But despite that, there are large, great differences in prosperity.”
The differences between success and failure often depend upon whether inclusive or extractive political and economic systems are present in a nation, Acemoğlu said.
Acemoğlu said an inclusive system is one in which “there is an impartial legal system, education and access to infrastructure and healthcare.” An inclusive system, he said, has a level playing field.
An extractive system is the exact opposite of an inclusive system. Acemoğlu said extractive systems do not ensure property rights, generally lack enforcement of law and are generally a non-level playing field.
According to Acemoğlu, the key to economic development lies in an inclusive political and economic system. He said these systems allow for effective state building, which in turn helps to generate economic growth.
Acemoğlu then moved into a deeper analysis of an inclusive political system, which he considers to be the key component for effective state building. According to Acemoğlu, the two aspects of a political system are pluralism and the strength of the state.
Acemoğlu said he was able to separate states into three groups, classified as region I, II and III states, based upon the extent to which states employ pluralism and the strength of the state.
Region I states are characterized by a high degree of plurality and low state strength.
“You are going to have states stunted from the bottom,” Acemoğlu said of region I states. “[This] means that society stunts the growth.”
Lebanon is the best modern day example of a Region I state, Acemoğlu said. In Lebanon, there is a societal aversion to any one ethnic group gaining power. As a result of this aversion, there is a lack of centralized power that, according to Acemoğlu, hinders economic growth.
In Region II states, Acemoğlu said there is “a dynamic political development where state capacity and pluralism co-evolve.”
Acemoğlu said it is in this region in which state building can flourish.
In this system, “(there is) not a strong state that is imposing its will upon people, but strong state which comes from the consent of society because it has the ability to keep state accountable,” he said.
The final region of states, Region III states, are defined by a high state strength and a low degree of pluralism. Acemoğlu describes these states as “paper leviathans.”
In region III states, Acemoğlu said, “The state is very powerful and the pluralism is not present to check it.”
These region III states, of which Colombia is a prime example according to Acemoğlu, there are often modern advancements in central areas. Beyond this central area, there is little control as the government does not have popular support, and any semblance of a strong state collapses; therefore, effective state building is impossible.