Feb 4, 2009

Trade and the diffusion of the industrial revolution

Robert E. Lucas Jr. has a new paper in the new AEJ Macro journal called “Trade and the diffusion of the industrial revolution". I didn’t read it but I looked at the graphs and they are very aesthetic! One of his ideas seems to be that protectionist policies are responsible for poor economic performance. He writes: 

These culturally similar societies had similar income levels in 1950. Since 1950, the southern Europeans have joined in, and contributed to, the prosperity of the European Union. With the exception of Chile, the South Americans have continued to follow the protectionist policies of the interwar years. The two groups have steadily diverged (and Chile is now the richest of the four Americans). The figure is only suggestive, but it is surely plausible that, as is the case with Eastern Europe, the poor economic performance of Latin America is a policy-induced failure to reach economic potential

By the way, I find all the articles in the issue interesting. This is surprising as it is all macro.

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