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

How fertile Countries Got Rich andWhy Poor Countries Stay PoorBy Erik S. ReinertThe guard How Rich Countries Got Rich and Why Poor Countries Stay Poor is compose by Erik S. Reinert and it is published in 2007. Reinert is a 62-year-old Norwegian economist who specializes in development scotchs and frugal history (Wikipedia). Reinert attended the University of St. Gall(a)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 theory of uneven development and the history of economic thought and insurance (Wikipedia). Reinert is not only an eminent scholar in his field, only also a distinguished entrepreneur. In 1972 he founded a small industrial firm that did color sampling to the paint and automotive industries. afterwards he developed the firm and added production plants in Norway and F inland, and by the time he sold it in 1991, the company had take the largest of its kind in Europe (Wikipedia). Reinert is influenced by Fried robust List and it shows in his piece.Reinert suggests that globalization would remove been a positive-sum game for all countries if the world has taken Friedrich Lists path to economic consolidation (Reinert, 161.). Friedrich has developed his own theory about the timing of tariffs and idle art, and the sequence basically goes like this (1) a period of separated 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 sectors (Reinert, 161.).After going through all the above steps, its time to open for global free trade and globalization will gain the woeful nations as well as the rich ones. Based on Reinerts education level, the kernel of research and publication he has done in the field of uneven development and his work experience, it plunder be concluded that Reinert is both qualified educationally and by experience to write thisbook.How Rich Countries Got Rich and Why Poor Countries Stay Poor is Reinerts intimately recent English-language book and his purpose of written material this book is to find out the causes of poverty and to explain the mechanisms that ca-ca the huge gap between the rich and the poor. He looks through the economic history of the past 500 hundred years and concludes the economic building that most rich countries follow faithfully and eventually make them rich industrial enterprise policies first, free trade second. Once the rich countries become rich (e.g. the European countries), the type of economic understanding employed by them during their transition from poor to rich dies and they comes up with the completely different standard economics (abstract high theories) for exportation to poor countries. As a consequence, the standard economics, such as the Washington C onsensus, 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 unite Kingdom, into the Age of Industry (Reinert, 123.) Industrialization is the genuinely first step towards success. With the effect of increasing returns and specialization, the benefit of industrialization goes much 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, are 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 uncouth is able to excite 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 in creasing returns, which are main sources of economic power, create economic barriers to gate and make it even more(prenominal) difficult for poor countries to catch up (Reinert, 40.). Rich countries specialize in the right economic activities also develop economic scale and as a consequence, more force back is needed 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 gull higher wages or to lower the prices of goods (Reinert, 131.). On the other 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 important role in keeping poor countries poor. Another compute that is crucial to the poor nations is the timing of opening up of an economy because free trade tends to destroy the most efficient 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 maximum benefits from globalization but for poor nations, the free trade is like adding frost to snow. In conclusion, Reinert sees the wealth as a issue 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 insurance 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 instruct from its success. But during the Qing dynasty, the government chose the policy of isolation and it destroyed the economic development of China. The Qing government restricted the away transport and foreign trade. Imported goods were heavily taxed. The variety and quantity of exported goods were limited as well. China spaced itself from others while many western competitors were in the process of industrialization. Many industrialized western nations were seeking raw territories and the deindustrialized China without any advanced arms naturally became their target.Effortlessly, their machine guns bombed the locked country. After that, China learned lessons and started to need economic structure carefully. Instead of following the immediate economic integration, China followed the Marshall Plan whose tendency 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 World Ba nk and IMF, experienced smuggledconsequences (Reinert, 118.). Although China has gone back to the right track, but the fact that China is a developing country instead of a developed country demonstrates that the scar caused by the mistaken choice of economic policy and deindustrialization hasnt healed. The story of China shows the consequences of failing to recognize the importance of industrialization and timely free trade. The calamity explains why poor countries are poor and the presently wealthy countries are those who embrace the industrialization and capitalism. primarily 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 focused on his theme but sometimes he tends to overemphasize it by repeating the confusable 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 controversial subjects and masses would want to find out the answers.BibliographyS. Reinert, Erik, How Rich Countries Got Rich and Why Poor Countries Stay Poor, London police constable & Robinson Ltd, 2007 http//en.wikipedia.org/wiki/Erik_S._Reinert