How Rich Countries Got Rich and Why Poor Countries Stay Poor Essay

How deep Countries Got Rich andwhy sad Countries Stay PoorBy Erik S. ReinertThe keep back How Rich Countries Got Rich and wherefore Poor Countries Stay Poor is written by Erik S. Reinert and it is published in 2007. Reinert is a 62-year-old Norwegian stinting expert who specializes in exposement frugals and economic history (Wikipedia). Reinert attended the University of St. G all(a)(prenominal)en in Switzerland (where he studied economics), Harvard University for MBA, and Cornell University for Ph.D.(Wikipedia). In addition to How Rich Countries Got Rich and Why Poor Countries Stay Poor, Reinert has written six books which focus around the possible action of uneven development and the history of economic thought and policy (Wikipedia). Reinert is non wholly an eminent scholar in his compass, but also a distinguished entrepreneur. In 1972 he founded a small industrial planetary house that did color sampling to the paint and automotive industries. Later he demonstr subje ct the firm and added production plants in Norway and Finland, and by the time he exchange it in 1991, the comp each had become the largest of its kind in Europe (Wikipedia). Reinert is influenced by Fried well-off List and it shows in his piece.Reinert suggests that world-wideization would have been a positive-sum game for all countries if the world has taken Friedrich Lists line to economic consolidation (Reinert, 161.). Friedrich has developed his own theory about the quantify of tariffs and surplus trade, and the succession basically goes like this (1) a period of free trade for all nations (2) a period when small states protect and build their own industries (4) a period when all countries establish their own competitive industrial firmaments (Reinert, 161.).After expiration through all the above steps, its time to open for global free trade and globalization will benefit the miserable nations as well as the rich ones. Based on Reinerts program line level, the amount of research and publication he has done in the field of uneven development and his work experience, it can be concluded that Reinert is devil qualified educationally and by experience to write thisbook.How Rich Countries Got Rich and Why Poor Countries Stay Poor is Reinerts most young English-language book and his purpose of writing this book is to find out the causes of meagreness and to explain the mechanisms that produce the huge bedcover between the rich and the myopic. He looks through the economic history of the past 500 hundred historic period and concludes the economic structure that most rich countries follow faithfully and lastly start out them rich industrial enterprise policies first, free trade second. Once the rich countries become rich (e.g. the European countries), the type of economic lowstanding utilise by them during their transition from miserable to rich dies and they comes up with the completely divergent bill economics (abstract high theories) fo r export to poor countries. As a consequence, the standard economics, much(prenominal) as the Washington Consensus, proves to be damaging to poor countries and makes them even poorer.It can be observed that the rich countries were those who emulated the leading industrial nations, such as the United Kingdom, into the Age of Industry (Reinert, 123.) Industrialization is the very first step towards success. With the effect of increasing returns and specialization, the benefit of industrialization goes often further. Industrialized countries take all the jobs that require high skills and technology, while the jobs industrialized countries can no longer mechanize or innovate further, such as straightening of the wire, ar farmed out to the non-industrialized countries (Reinert, 39.) Rich countries produce mechanizable products while poor countries can only produce non-mechanizable ones and it explains why no country is able to get rich by only producing raw materials (Reinert, 134. ). An industrial sector is essential for a country to become rich. As time zips by, technology and increasing returns, which are main sources of economic power, create economic barriers to accounting entry and make it even more difficult for poor countries to catch up (Reinert, 40.). Rich countries specialize in the serious economic activities also develop economic scale and as a consequence, more labor is undeniable to perform the tasks and the cost of each unit of product falls (Reinert, 40.).Workers are paid more and the things they buy cost less. Both outcomes reflect the two ways to raise the standard ofliving to receive higher struggle or to lower the prices of goods (Reinert, 131.). On the other(a) side, rich countries force the conclusions of standard economic policies which they would not apply at home, upon the poor nations that are under their wings, such as keeping the colonies as pure suppliers of raw materials (Reinert, 39.). The rhetoric-reality gap plays an impo rtant role in keeping poor countries poor. Another gene that is crucial to the poor nations is the timing of opening up of an economy because free trade tends to destroy the most cost-effective industries in the least efficient countries (Reinert, 251.). Most rich countries are industrialized before the free trade, so that when they enter the market, they are capable to compete with other countries and get the upper limit benefits from globalization but for poor nations, the free trade is like adding cover to snow. In conclusion, Reinert sees the wealth as a result of industrialization, together with other factors such as increasing returns, synergies and he blames poverty for deindustrialization, and the wrong timing of free trade.In general, I agree with Reinerts opinion that industrialization and the timely free trade policy are the keys to wealth. The development path of chinaware can be a perfect example for this. China was very prosperous during the Tang dynasty, and many western countries sent scholars all the way to China to learn from its success. But during the Qing dynasty, the government chose the policy of closing off and it destroyed the economic development of China. The Qing government restricted the external fare and foreign trade. Imported goods were heavily taxed. The variety and quantity of exported goods were limited as well. China isolated itself from others while many western competitors were in the movement of industrialization. Many industrialized western nations were seeking new territories and the deindustrialized China without any advanced arms naturally became their target.Effortlessly, their machine guns bombed the locked country. After that, China versed lessons and started to choose economic structure carefully. Instead of following the immediate economic integration, China followed the Marshall Plan whose goal is to reindustrialize. Fortunately, China chose the right economic structure this time and it was used as proof of the excellence of globalization while Russia, a country faithfully followed the advice given by the founding Bank and IMF, experienced disastrousconsequences (Reinert, 118.). Although China has gone back to the right track, but the fact that China is a developing country preferably of a developed country demonstrates that the scar caused by the mistaken prime(prenominal) of economic policy and deindustrialization hasnt healed. The story of China shows the consequences of failing to complete the importance of industrialization and timely free trade. The failure explains why poor countries are poor and the presently wealthy countries are those who embrace the industrialization and capitalism.Generally speaking, the book is well written. Reinert organizes the book by using sub headings to separate the content and drawing examples from the economic history to support his theories, which make the book more understandable and reliable. There are only a few graphics, a bibliography and a very long appendix at the end, suggesting there are a lot of facts and in-depth research behind the book. The only problem that I have with this book is the repetitiveness of theories. Reinert is very cerebrate on his theme but sometimes he tends to overemphasize it by repeating the similar theories in different chapters. I would recommend the book to readers who have a particular interest in the topic of equalization, or the gap between the rich and the poor. Reinert discusses a lot of highly disputable subjects and people would want to find out the answers.BibliographyS. Reinert, Erik, How Rich Countries Got Rich and Why Poor Countries Stay Poor, London Constable & Robinson Ltd, 2007 http//en.wikipedia.org/wiki/Erik_S._Reinert