Friday, November 4, 2011

Challenges for Social Sciences: Institutions and Economic Development

Daron Acemoglu,

Massachusetts Institute of Technology (MIT) - Department of Economics has a great overview piece on Challenges for Social Sciences: Institutions and Economic Development.

Why some countries are much poorer than others is one of the oldest questions in social science. It will also be one of the most challenging and important questions in the next several decades. This is for several reasons. First, despite spectacular growth in per capita incomes in much of the world during the 20th century, the gaps between rich and poor countries, rather than abating, have expanded. This pattern is challenging to most of our theories because many of the barriers to the spread of prosperity have disappeared: ideas travel around the world almost instantaneously, and any nation should today be able to easily copy any economic or social practice that it wishes; various impediments to trade in goods and to financial flows and foreign direct investments have largely disappeared. But the wide gaps in incomes and living standards remain. Second, these gaps have meant that while the rich world has become richer, poverty, disease and social injustice are still widespread in many parts of the world, notably in much of sub-Saharan Africa, in parts of South Asia and in various pockets of poverty in the Caribbean and Central America.

Challenging though these issues may be, we are now much better equipped to understand, and perhaps work towards redressing, the causes of these widespread disparities. Much of the progress on this issue has been made in economics (see Acemoglu, 2009, for an overview), but the next step will require us to combine the insights and tools developed in economics with perspectives from other social sciences.

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