Modern Macroeconomics.pdf

562 Modern macroeconomicsin order to protect their economic rents (Parente and Prescott, 2000). Incontrast, Daron Acemoglu and James Robinson in a series of papers advocatea ‘political losers’ hypothesis’ as an alternative and more plausible explanationof why there emerge institutional barriers to development (see, forexample, Acemoglu and Robinson, 2000a).10.17 Political Barriers to Economic GrowthEconomists have a good idea of the broad requirements that are needed foreconomic growth, or rather they at least know what not to do! And yet manygovernments continue to choose to maintain what everyone knows to bedisastrous policies and institutions that inhibit or even destroy incentives,productivity growth and entrepreneurial activity. Such regimes are also characterizedby excessive corruption (Aidt, 2003). Since policies and institutionsseem to be ‘first-order’ determinants of the economic performance of countries,why don’t governments learn from their mistakes and switch to betterpolicies? What explains the persistent and repeated adoption and maintenanceof inefficient institutions and proven bad policies (Robinson, 1998)?This is clearly one of the most important contemporary questions in politicaleconomy. Is there a rational choice explanation that does not have to assumethat dysfunctional political leaders, such as Mobutu in Zaire, are simply mador irrational and ideologically blind to reason?Acemoglu (2003b) and Acemoglu and Robinson (2000a, 2000b, 2000c,2001, 2003) provide a political perspective on the origin and persistence ofeconomic backwardness. Their main line of argument runs as follows:1. the introduction of new technology that will enhance economic efficiencyand economic growth will also influence the distribution of politicalpower;2. groups who feel that their political power will be eroded as a result of theintroduction of new technology will deliberately block such change evenif it is to the overall benefit of society;3. although new technology will increase future output, and hence therevenue of the politically powerful groups, the incumbent élite also fearthat new technology will enhance the power of competing groups therebythreatening the future of the élite;4. therefore there is a trade-off facing any élite between the potential rentsthat can be earned from allowing technological progress and the threat tothe élite’s monopoly of political power;5. serious commitment problems prevent the élite from supporting growthenhancingtechnological, institutional and policy changes and thenredistributing a part of the gains to themselves;