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How Rich Countries Got Rich and Why Poor Countries Stay Poor, by Erik S. Reinert
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In this work, Erik S. Reinert shows how rich countries developed through a combination of government intervention, protectionism, and strategic investment. Reinert suggests that this set of policies in various combinations has driven successful development from Renaissance Italy to the modern Far East. Yet despite its demonstrable success, orthodox development economists have largely ignored this approach and insisted instead on the importance of free trade. Reinert presents a strongly revisionist history of economics and shows how the discipline has long been torn between the continental Renaissance tradition on one hand and the free market theories of English and later American economics on the other. He argues that our economies were founded on protectionism and state activism and could only later afford the luxury of free trade. When our leaders come to lecture poor countries on the right road to riches they do so in almost perfect ignorance of the real history of mass affluence.
- Sales Rank: #4767303 in Books
- Published on: 2007-01-25
- Original language: English
- Number of items: 1
- Binding: Hardcover
- 224 pages
Review
Reinert asks the most fundamental questions about economic development, and proceeds to answer them with clear logic, a sweeping grasp of history and an immensely readable style. Network Ideas It lands powerful punches. The Sunday Telegraph Unlike much of the writing produced by opponents of globalization, these are serious books by serious people. They deserve to be read. Reviewed alongside H-Joon Chang's book in Financial Times. Warning: this book will forever change your conception of economic development. Prof Perez, Cambridge University. A breakthrough in our understanding of the links between technology and the wealth and poverty of nations. Prof Freeman, Univ of Sussex.
About the Author
Erik S. Reinert, author of Globalization, Economic Development and Inequality: An Alternative Perspective (2004), is Professor of Technology, Governance and Development Strategies at Tallinn University of Technology, Estonia, and President of The Other Canon Foundation, Norway. He is one of the world's leading heterodox development economists and is based in Norway.
Most helpful customer reviews
1 of 1 people found the following review helpful.
From a poor country...
By MADC
I believe this book to be a very serious effort for understanding the realities of development. From a historical point of view, it is well researched and informative. Maybe repetitive at times, but I do not complain about this, as sometimes repetitions help to clarify some aspects. I agree with most of the arguments exposed in the book.
Having the experience of working (years ago) in the coordination between my govt and the USAID for the implementation of projects, mainly infrastructure, but also projects with the private sector, I felt that the economists and staff working for the USAID were good intentioned people and really wanted to help our country. But that was the people directly involved with the projects and that was the years when, what we call "the Washington Consensus" today , was starting to develop as an economic world view to be imposed on us.
That being said, my opinion is that the book is very accurate in its analysis and its conclusions. Reading this book is a must, if you are interested in the "problems" of development and want to compare alternatives different from the discourse of the neo-classical economists.
I do not believe that the neo-classical (or the Washington Consensus) model failed. I think that the results they were getting, were exactly what the global elites wanted. They pursued a new kind of colonialism and they were on target. Terrible results for poor countries, but a success for the people behind the scheme.
As a final comment, after this book was written a new crisis developed and the issue of inequality has taken the front row, as evidence that not only the poor countries are being harmed...We still have a lot to see...live and learn!
4 of 4 people found the following review helpful.
Very Thought-Provoking Rejection of Free Trade for Development
By David Roth
In "How Rich Countries Got Rich and Why Poor Countries Stay Poor," Erik Reinert resuscitates and refines the infant-industry argument for developing countries' protecting their industries. Rather than just accept what a poor country is (relatively) good at doing--often mining or subsistence agriculture--the nation should choose among activities that are likely to grow more productive in the future. Such industries are often manufacturing- and technology-based modern industries, which will help usher in a productive economy and reduce poverty. This is a very old argument which has simultaneously been rejected in the world policy community--in favor of free trade ("globalization")--and revived in academic economics (especially by Stanford's Paul Romer, sure to win the Nobel Prize within the next 5 years for his work).
Reinert convinces us of his perspective via numerous examples--old and new, successful and unsuccessful--of economies whose best path involved protecting an industry it wants to develop and letting it mature. Post-1960 South Korea in steel and cars, post-1990 Ireland in information technology, etc.
Reinert's focus on choosing industrial activity with great potential for productivity growth--rather than just any modernization--is key. Unfortunately, many development projects have failed exactly because they ushered in "modernization" through introduction of capital--dams, machinery--without any of the positive feedbacks ("synergies") that allow productivity to grow rapidly.
As important and convincing as this work is, we should take Reinert's recommendations with a grain of salt: Choosing the right sectors in which to pour resources is easier said than done. Everyone attributed Japan's economic miracle to it--at least up until 1990 when the economy imploded. Should a very poor country try to jump all the way to modernity, or develop in a number of steps that are more manageable and more appropriate given the level of education in the country? How should the country coordinate education, intellectual property, and other policies with its industrial policy?
These caveats aside, Reinert provides a great read, lots of examples of successful industrial policy based on increasing returns, and a good historical/theoretical background.
2 of 2 people found the following review helpful.
An Impressive Case
By Robert Sullivan
When you feel the need to write a book that essentially says, "I'm right and everyone else is wrong," it helps to have a cogent argument, because no one likes a know-it-all. This book does, but be forewarned: this is not easy-going for the average reader. If you don't know who Adam Smith, Thorstein Veblen, Joseph Schumpeter or John Maynard Keynes are, or you have only passing affinity for Karl Marx or David Ricardo, you might want to read Robert Heilbroner's "Worldly Philiosphers" book before you attempt this one (or at least have it handy for reference). What this book essentially says is that for rich countries to be espousing "free trade" as the manner by which all poor countries will lift themselves out of their poverty is the worst kind of hypocritical demagoguery the world has seen in a while; in other words, these hotheads who are protesting against the WTO or Wall Street basically have the right idea but are misguided only in their methods of showing it. "Do as I say; not as I did," the parent while chain-smoking lectures his or her skeptical offspring on the evils and health-consequences of tobacco, by way of commonplace metaphor.
Packed with plenty of quotes from past economists who don't get much air time or respect today, personal anecdotes and footnotes galore, this is not to be a book to be missed, even if you don't end up agreeing with the writer. Also a very well-proofed manuscript; I found one sentence at the end of page 199 lacking a verb (but still making sense) and a close parenthesis on page 257 without a precedent but that was it.
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