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ILRIC330ScottQuotes - Max Shapnik The Great Divide in the...

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Max Shapnik The Great Divide in the Global Village: At first glance, there are two causes of this divergence between economic theory and reality. First, the rich countries insist on barriers to immigration and agricultural imports. Second, most poor nations have been unable to attract much foreign capital due to their own government failings. These two issues are fundamentally linked: by forcing poor people to remain in badly governed states, immigration barriers deny those most in need the opportunity to "move up" by "moving out." In turn, that immobility eliminates a potential source of pressure on ineffective governments, thus facilitating their survival. Economic development requires the transformation of institutions as well as the freeing of prices, which in turn requires political and social modernization as well as economic reform. The state plays a key role in this process; without it, developmental strategies have little hope of succeeding. The most recent World Development Report shows that real per capita incomes for the richest one-third of countries rose by an annual 1.9 percent between 1970 and 1995, whereas the middle third went up by only 0.7 percent and the bottom third showed no in- crease at all. These rich countries account for about 60 percent of world GDP but only 15 percent of world population. Why is it that the poor countries continue to fall fiirther behind? One key reason is that most rich countries have largely excluded the international fiow of labor into their mar- kets since the interwar period.
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