ECON 313 Lecture Notes - Lecture 4: Comparative Advantage, Equal Opportunity, Adverse Selection
27 Mar 2018
School
Department
Course
Professor
Document Summary
Most modern ideas about development will focus on the information in this lecture. But, causation is not the same as correlation. It could be that geography directly corresponds to long-run development. It is more likely that geography corresponds to certain kinds of institutions, which in turn contribute to long-run development. Another possibility is that man-made influences in the economic environment may by more important than the forces of nature. Therefore man-made influences correspond to the creation of institutions. "institutions form the incentive structure of a society, and the political and economic institutions, in consequences are the underlying determinants of economic performance. " Informal (norms and behaviour, conventions, codes on conduct) "some societies are organized in a way that upholds the rule of law, encourages investment of all kinds, facilitates broad-based participation of citizens, and supports market transactions. Loosely speaking, we can refer to these societies as having developed good institutions. " Institutions provide "rules of the game" for economic life.
