On the rich-poor gap

A question from Yahoo! Answers:

Why the gap between the rich countries and the poor ones?

i want to know the economic factors behind the gap between the developed and underdevelope countries

The most important factors is institutions. Countries that ended up poor had institutions that existed to protect the military aristocracy at the expense of the commercial class. Countries that ended up rich had institutions that existed to limit the power of the military aristocracy and help the commercial class to operate and quickly and peacefully resolve any disputes that arise in the process.

You should read Daron Acemoglu’s papers on the importance of institutions in economic growth:

http://econ-www.mit.edu/faculty/index.ht…

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