Acemoglu, Johnson and Robinson proved that institutions are the Essay

Acemoglu, Johnson and Robinson proved that institutions are the ultimate cause of economic development. Do you agree - Essay Example As a result, in societies where political and economic power has been distributed for a long time on a consistent basis, institutions are usually path-reliant. This occurs even in societies where the institutions are socioeconomically below the optimal standards of operation. Acemoglu et al. (2001:1395) state that many scientists and economists hold that contrasts in institutions and government policies are the primary causes of huge disparities in income per capita among countries. They further claim that contrasts in colonial experience may be a genesis of exogenous disparities in institutions. This claim is based on two logics. The first is that Europeans employed very different strategies when colonizing other nations, and these strategies spawned different institutions. On one hand, such as in New Zealand, America, and Australia, they established institutions that implemented the rule of law and promoted investment. On the other hand, in countries like Ghana (Gold Coast) and the Congo, they established exploitative regimes aimed at quickly extracting resources. These institutions impeded economic growth and investment. Secondly, the institutions established in both extremes of the world remain in place today and have led to the differences in econom ic development and stability of the affected countries (Acemoglu, Johnson, & Robinson, 2001:1395). According to Acemoglu et al. (2002:572), Atlantic trade catalysed European growth via ancillary institutional media as well as its more pertinent root effects. However, the crux of their argument, which relates to this paper, is that Atlantic trade earned huge profits for merchant interests in favour of institutional reform in states that satisfied two vital preconditions: democratic initial institutions and convenient access to the Atlantic. The result was a shift in political influence away from the