Question: Why is North Korea relatively poor and South Korea relatively rich?
If you ask people why some nations are rich and some are poor, you're likely to hear answers such as the type and amount of natural resources, the attributes of the population at large, and other factors. But the above question begs the question: North and South Korea are relatively homogeneous in terms of natural resource endowment and population, to a large degree...so what accounts for the difference?
In a word, institutions. Specifically, the institutions of private property rights and a stable legal regime.
Douglass North, one of the co-authors of the book we are reading, is a pioneer in the study of how institutions affect economic growth. Alas, even with the understanding we have today, some nations try and avoid the trade-off that exists between stable institutions and politically expedient solutions.
Case in point: Zimbabwe. Once considered the "jewel" of Africa, Zimbabwe is now experiencing economic stagnation, due largely to the abandoning of economic institutions that foster growth.
Question: Why would a nation voluntarily abandon institutions that foster economic growth? Is there a geographic pattern to this phenomenon? Discuss.