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Economic Gangsters

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Economic Gangsters

Corruption, Violence, and the Poverty of Nations

Princeton UP,

15 min read
10 take-aways
Text available

What's inside?

Fascinating study uses cost-benefit analyses to examine causes and effects of poverty and corruption.

Editorial Rating

8

Qualities

  • Innovative
  • Eye Opening
  • Engaging

Recommendation

Economists Raymond Fisman and Edward Miguel tour Africa and Asia to point out where old-fashioned economic cost-benefit analyses can explain corruption, poverty and some gruesome crimes against humanity. They find compelling examples, including the murders (albeit rare) of suspected witches in Tanzania and the parking habits of diplomats in New York City. Their study is a great read about people’s psychological and economic motivations. getAbstract recommends their work to investors, academicians, NGOs, charities and policy makers seeking insight into the seemingly intractable problems of poverty and corruption in the developing world.

Summary

The Poverty Puzzle

Since the mid-1900s, some nations have escaped the chains of poverty to achieve stunning economic growth. These include the Asian tigers of South Korea, Malaysia, Taiwan and China. Yet poverty dominates Africa and parts of Asia. Consider Kenya: After a bloody revolution in the 1960s, the African nation seemed poised for freedom and prosperity. It had as much potential for economic growth as South Korea or China. With its fertile soil and rich stores of resources, Kenya could have grown into an economic power. Yet the typical Kenyan remains mired in poverty.

Effective poverty-fighting programs might help three billion people who scrape by on less than $2 per day move out of starvation and illiteracy. Why does Kenya lag as South Korea flourishes? For decades, Kenya received international aid from charities and foreign powers. The idea behind this largesse was that, with a helping hand, Kenya could lift itself into sustainable prosperity. But that’s not what happened.

Some experts, such as Columbia University economist Jeffrey Sachs, insist that ending the “poverty trap” requires the US and other rich countries to give more to poor states. Funneling...

About the Authors

Raymond Fisman is the Slater Family Chair in Behavioral Economics at Boston University. Edward Miguel is Oxfam Professor in Environmental and Resource Economics in the Department of Economics at the University of California, Berkeley.

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    T. S. 8 years ago
    To many inflammatory statements and baseless conclusions ...episodes or interesting stories do not make it for facts and good policies prescriptions !