Law, Information, and the Poverty of Nations
Sustained growth occurs in developing nations through improvements in markets and organizations. These entrepreneurial innovation resembles a biological mutation that is unpredictable before it occurs and understandable afterwards. It is unpredictable because it begins with the innovator possessing private information by which he earns extraordinary profits. It is understandable because its ends with the public figuring out the innovation and profits approaching the ordinary rate of return. These characteristics of innovation have important consequences for law and policy to foster economic growth. Specifically, government officials who rely on public information cannot predict which firms or industries will experience rapid growth. Consequently, industrial policies that promote growth are unlikely to succeed. Proponents of industrial policy today make the same mistake as the mercantilists whose interventions Adam Smith attacked as a cause of national poverty. In contrast, secure property and contract rights, and effective business law (especially the laws regulating financial markets), create conditions under which competition naturally produces entrepreneurial innovation and nations become rich.
|Date of creation:||10 Feb 2005|
|Date of revision:|
|Contact details of provider:|| Postal: |
Fax: (510) 642-3767
Web page: http://www.escholarship.org/repec/blewp/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer, 1998.
"Corporate Ownership Around the World,"
NBER Working Papers
6625, National Bureau of Economic Research, Inc.
- Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 1998. "Corporate Ownership Around the World," Harvard Institute of Economic Research Working Papers 1840, Harvard - Institute of Economic Research.
- Murphy, Kevin M & Shleifer, Andrei & Vishny, Robert W, 1989.
"Industrialization and the Big Push,"
Journal of Political Economy,
University of Chicago Press, vol. 97(5), pages 1003-26, October.
- Murphy, Kevin M. & Shleifer, Andrei & Vishny, Robert W., 1989. "Industrialization and the Big Push," Scholarly Articles 3606235, Harvard University Department of Economics.
- Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1988. "Industrialization and the Big Push," NBER Working Papers 2708, National Bureau of Economic Research, Inc.
- Lau, Lawrence J & Qian, Yingyi & Roland, Gérard, 1997.
"Pareto-Improving Economic Reforms through Dual-Track Liberalization,"
CEPR Discussion Papers
1595, C.E.P.R. Discussion Papers.
- Lau, Lawrence J. & Qian, Yingyi & Roland, Gerard, 1997. "Pareto-improving economic reforms through dual-track liberalization," Economics Letters, Elsevier, vol. 55(2), pages 285-292, August.
- Lawrence J. Lau & Yingyi Qian & Gerard Roland, . "Pareto-Improving Economic Reforms through Dual-Track Liberalization," Working Papers 97007, Stanford University, Department of Economics.
- Buchanan, James M, 1988. "Contractarian Political Economy and Constitutional Interpretation," American Economic Review, American Economic Association, vol. 78(2), pages 135-39, May.
- Douglass C. North, 1993. "The Paradox of the West," Economic History 9309005, EconWPA.
- Douglass C. North, 1990.
"A Transaction Cost Theory of Politics,"
Journal of Theoretical Politics,
, vol. 2(4), pages 355-367, October.
- Buchanan, James M, 1987.
"The Constitution of Economic Policy,"
American Economic Review,
American Economic Association, vol. 77(3), pages 243-50, June.
- Robert J. Barro, 1998.
"Determinants of Economic Growth: A Cross-Country Empirical Study,"
MIT Press Books,
The MIT Press,
edition 1, volume 1, number 0262522543, June.
- Robert J. Barro, 1996. "Determinants of Economic Growth: A Cross-Country Empirical Study," NBER Working Papers 5698, National Bureau of Economic Research, Inc.
- Adelman, Irma & Morris, Cynthia Taft, 1997. "Editorial: Development history and its implications for development theory," World Development, Elsevier, vol. 25(6), pages 831-840, June.
- Buscaglia, Edgardo, 2001. "An analysis of judicial corruption and its causes: An objective governing-based approach," International Review of Law and Economics, Elsevier, vol. 21(2), pages 233-249, June.
- Buscaglia, Edgardo & Ulen, Thomas, 1997. "A quantitative assessment of the efficiency of the judicial sector in Latin America," International Review of Law and Economics, Elsevier, vol. 17(2), pages 275-291, June.
- Rose-Ackerman,Susan, 1999. "Corruption and Government," Cambridge Books, Cambridge University Press, number 9780521659123.
- Rose-Ackerman,Susan, 1999. "Corruption and Government," Cambridge Books, Cambridge University Press, number 9780521632935.
- Murphy, Kevin M & Shleifer, Andrei & Vishny, Robert W, 1992. "The Transition to a Market Economy: Pitfalls of Partial Reform," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 889-906, August.
- Avinash Dixit, 2003. "Some Lessons from Transaction-Cost Politics for Less-Developed Countries," Economics and Politics, Wiley Blackwell, vol. 15(2), pages 107-133, 07.
- Torstensson, Johan, 1994. "Property Rights and Economic Growth: An Empirical Study," Kyklos, Wiley Blackwell, vol. 47(2), pages 231-47.
When requesting a correction, please mention this item's handle: RePEc:cdl:oplwec:qt4hd374nq. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Lisa Schiff)
If references are entirely missing, you can add them using this form.