Biography[ edit ] Reinert was born in Oslo , attended the University of St. Already during his studies, he spent time in Latin America , working with a community development project in the Peruvian Andes , as well as in private industry. In he founded and later developed a small industrial firm, Matherson-Selig, later shortened to Matherson SpA , color sampling to the paint and automotive industries in Bergamo , Italy. Adding production plants also in Norway and Finland, the company had become the largest of its kind in Europe when Reinert sold it in Reinert then worked for the STEP group in Oslo — and later became Director of Research of the Norsk Investorforum, a think tank set up by large Norwegian corporations — In , he became the Executive Chairman of The Other Canon Foundation, a small center and network for heterodox economics research.
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Start your review of How Rich Countries Got Rich And Why Poor Countries Stay Poor Write a review Shelves: non-fiction , business , all-time-favourites , scandinavian This is a brilliant book about the failures of standard economic theory to explain the reality we all live in.
I have rarely read a non-fiction book that has been so lucid and informative as this one. I studied classic economic theory in highschool. So I ended up with economy. One of the first lessons was that economic theory is This is a brilliant book about the failures of standard economic theory to explain the reality we all live in.
One of the first lessons was that economic theory is based on the fact that man makes rational and informed descions. Even to my year old mind that was about the stupidest thing I had ever heard.
Reinert goes a long way to prove that mainstream economic theory today is based on over-simplification of reality formulated into mathematical models that are difficult for the lay person to get through.
Psychology, sociology and history have all been removed from economic theory in the desperate attempt to make the latter more scientific. This means that most of the current ideas have very little basis in reality and cannot formulate any intelligent means of reducing poverty. The free trade and "invisible hand" of the market are forced on immaturely industrialized countries who cannot possibly compete internationally. Equally impossible is becoming rich on exporting raw materials.
What nature provides results in diminishing returns. Eventually the cost of expanding, say, the production of wheat means a lower yield per acre as poorer land must be used. The only way a nation can become rich is through industrialization.
Throughout history there are a myriad of examples of Western Nations protecting their own start-up industries. The markets were only opened up when these industries were mature. This is completely ignored these days. History is not important according to mainstream economics.
Today statistics from the World Bank show that a bus driver in Germany has real wages that are sixteen times higher than those of his just as efficient colleague in Nigeria. The phenomenon is there, and the effects can be measured, but presentely no theory exists that describes these mechanisms satisfactorily. I am of the opinion that the main explanation for this is that the rich world today has confused the reasons for economic growth - innovation, new knowledge and new technology - with free trade, which is just means transport of goods across borders.
As did Adam Smith, the richt countries confuse the age of manufacturing with the age of commerce. The World Bank presents developing nations with a one-size fits all solution to underdevelopment. They do not take into consideration the wildly different variables between Ecuador or Mongolia at all. Rather, one must come to accept the incredible wealth and diversity of economic theory and practice, and subsequently appreciate the need for a much, much larger toolkit of economic policy.
The policies that will benifit Great Britain are probably not exactly the same as those that will benefit Switzerland, and even less probably the same as those that will benefit Equatorial Guinea, Myanmar, or Vanuatu. History, in the end, can be our only guide in navigating these tumultuous waters and new contexts. I cannot recommend it enough.
Erik S. Reinert
How Rich Countries Got Rich And Why Poor Countries Stay Poor