A New Framework for the Economic Development of Nations

The main objective of this book is to clarify what kind of institutions can be implemented to achieve better outcomes, in particular how developing countries can escape from poverty, from the so-called Malthusian trap. For the theoretical analysis I will make use of two models which respectively explain that:

• Rich countries have become rich mainly through high productivity in tradable goods (i.e. in the manufacturing sector);
• When the formation of human capital is due to the learning by doing process, to switch from a low-technology sector (e.g. farming) to a high-technology sector (e.g. manufacturing) a country has to adopt interventionist policies that restrict international competition.

The empirical analysis is based on the historical development pattern of selected countries and regional areas of the world. Based on the analysis performed I will provide a different explanation of the world economic development with respect to that provided by the mainstream economics.
Finally, an extension of the Solow model with a proxy for the level of economic protectionism will have the object to prove that State intervention, rather than financial aid, is useful to promote convergence towards the more advanced economies. Hence, it has a positive impact on long-run economic growth.