How Rich Countries Got Rich and Why Poor Countries Stay Poor Paperback – 24 Jul 2008
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Reinert asks the most fundamental questions about economic development, and proceeds to answer them with clear logic, a sweeping grasp of history and an immensely readable style. (Network Ideas)
It lands powerful punches. (The Sunday Telegraph)
Unlike much of the writing produced by opponents of globalization, these are serious books by serious people. They deserve to be read. (Reviewed alongside H-Joon Chang's book in Financial Times.)
Warning: this book will forever change your conception of economic development. (Prof Perez, Cambridge University.)
A breakthrough in our understanding of the links between technology and the wealth and poverty of nations. (Prof Freeman, Univ of Sussex.)
How Rich Countries Got Rich buries the economic orthodoxy once and for all and shows why freetrade is not he best answer for our hopes of worldwide prosperity.See all Product Description
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Lesson 1. Sustainable wealth is created by manufacturing industry. This was realised by the Tudor monarchs of England in the 16th century. They set about to create an enabling environment to foster manufacturing.
Countries which base their economies on agriculture and the exploitation of minerals do not become rich. They may attain the status of middle income countries if they are lucky.
Lesson 2. All rich countries, without exception, got rich by practising activist and interventionist policies. They put up barriers to the importation of foreign manufactured goods. They banned the export of raw materials needed by their own manufacturers. They made the import of foreign raw materials as easy as possible. They banned the export of technologically advanced machinery.
The state would invest in areas of the economy which were either too risky or too difficult for the private sector. In some cases the state would co-invest with the private sector.
In the 19th century, the leading nations of the West forced the weak independent nations of the world, such as China, Japan, Siam (Thailand) and the South American nations, to open their markets. These nations were forced to lower or even to remove their tarriffs against the West's manufactured goods. The Western nations, of course, kept their barriers up against foreign manufactures.
During the colonial period, the colonial powers banned their colonies from engaging in manufacturing.Read more ›
The American economist Paul Samuelson won a Nobel Prize for `proving' that under free trade prices paid to capital and labour tend to be the same across the world. But in the real world, free trade has led, not to the levelling up of world wages and the end of poverty, but to growing inequality and poverty. Half the world lives on less than $2 a day. In many countries, real wages peaked 30 years ago.
Reinert proves that the mode of production determines social forms, and that the technology and mass production of industry are the key to economic growth, not capital, property rights and the rule of law. Industry also has good economic, social and political effects. As he writes, "Creating and protecting industry is creating and protecting democracy."
But how can countries build industry? They need to protect their infant industries and to subsidise their industries.
Countries need to have an industrial policy that provides work for their educated people. Otherwise Western countries, outsourcing their education costs, will take them away - education for migration.
For example, 82% of Jamaica's doctors practise abroad and 70% of university-educated Guyanans work abroad. Their remittances fund consumption and dependence, not investment and industry.
It is better to have an inefficient industry than no industry at all.Read more ›
His arguments are buttressed by a keen awareness of the experience of nations that have developed, or are developing, from Britain in the 16th to 19th century to the more recent experiences of the Asian tigers and China. These are compared with those countries that have become mired in poverty and "diminishing returns" economic activities - essentially those who have specialised in being poor. The reader will also discover accounts of the theories of Economists from continental Europe and the United States going back centuries who are explicit about the role that protection plays in creating a wealthy nation that - at least theoretically - can improve the welfare and lives of its people. In the post WW2 period this understanding formed the basis of what was known as "Developmental Economics" - in the post Bretton Woods period all that experience became marginalised not least through the efforts of those Institutions that were at the centre of the Washington Consensus (World Bank, IMF and WTO).
Some of the other issues that Reinart covers include the Millennium Development Goals promoted by those such as Jeffrey Sachs (along with the ever present and somewhat vacuous Bono).Read more ›
Most Recent Customer Reviews
Essential read for everyone. This is the book I was searching for when studying business, but never knew existed. Read morePublished 20 months ago by Paul
I read this book when I was in Sweden and I could see how a lot of the policies described in it had value. Read morePublished 23 months ago by E. Burgess
Adam Smith's book, the wealth of Nations, told America not to protect her manufacturing and to trade freely with Europe but history tells us that America is the most protected... Read morePublished on 24 April 2012 by Michael
This is one of my favourite books. The main theme of this book is to explain why the free market ideology policies pushed onto many developing countries by the Washington... Read morePublished on 21 Jan. 2011 by Rob Julian
This book would be dull if it wasn't so annoying. I agree with the comment that says that he provides no statistical evidence. Read morePublished on 15 July 2010 by John Doe
In this book Erich Reinert questions the current Anglo-American consensus of free-market economics.
He looks at the line of economic thinking from Adam Smith, David... Read more
That's a recurring refrain here as Erik Reinert looks back over the history of economics and examines exactly how rich countries made their wealth. Read morePublished on 18 Aug. 2008 by Jeremy Williams
The previous review of this book is hard to fathom, unless the author wrote it himself. This book is far from a classic. Read morePublished on 16 Jun. 2007 by Kate Martindale