Entrepreneurs and Democracy

This column in the March 7, 2011 edition of The New Yorker has an interesting perspective on economic development – particularly in the Middle East. In the language of my University Seminar class, here’s the claim presented by James Surowiecki

The autocracies of the Arab world have been as economically destructive as they’ve been politically repressive. That’s no coincidence. Healthy economies need a thriving and independent private sector, where resources are allocated by markets and competition, and where small and medium-sized businesses can flourish. But in most of the Middle East the state and big business are so tightly intertwined as to be indistinguishable, and competition has been discouraged in favor of central planning and private monopolies.

In my Principles of Macroeconomics class we work on prioritizing investment options to improve long run economic development in the African  country of Sudan. And in the first week of class we talk about scarce resources in countries – sometimes including a culture of entrepreneurship as one of the key ingredients of economic health. Surowiecki’s analysis makes but it also relies heavily on western, classical assumptions about individual incentives for innovation and risk taking. Are we missing a perspective here?

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