In this series, we’ll be discussing about sources of economic progress for a country.
This issue’s reading is a chapter from the book called “Common Sense Economics: What everyone should know about wealth and prosperity” written by three prominent economists.
Why do some countries grow rapidly, while others stagnate or even regress economically? Why are incomes per person so much higher in some countries than others? Economists have asked these questions since Adam Smith=s era in the eighteenth century. Capital investment and new technology clearly contribute to growth, but they do not take place in a vacuum. Countries must have certain characteristics that allow their people to interact productively with one another. Sound institutions B the legal rules and customs, both formal and informal, that guide behavior B and sound government policies are the central elements of the growth process. Just as one or two weak players can substantially reduce the overall performance of an athletic team, a counterproductive institution or policy in one or two key areas can substantially harm the performance of an economy. This section will discuss the major factors that underlie the growth process and explain why per capita incomes differ substantially across countries.
We hope you enjoy the reading.