AT05: Order, Disorder and Economic Change. Latin America versus North America (Douglas)

Question 1

Why is establishing political order essential for long-term economic growth?

Answer 1

Political order is necessary for securing rights and privileges, which supports economic and political development.

A stable political order creates an environment conducive to investment and innovation.

Question 2

What contrasting historical experiences are examined to explore political order?

Answer 2

The experiences of Latin America and North America after independence.

This comparison highlights different paths of political and economic development.

Question 3

What are the three fundamental aspects that define political order?

Answer 3

• A structure of relationships that produces and enforces rights
• A body of rules that commits the state to protect these rights
• A constitution resulting from interactions and enforcement

These aspects ensure stability and predictability in governance.

Question 4

What is a credible commitment and why is it essential for economic growth?

Answer 4

A credible commitment assures individuals that their property rights will be secure, encouraging investment and long-term planning.

This reduces the risk of expropriation and fosters innovation.

Question 5

How do incremental and revolutionary sources of societal change differ?

Answer 5

• Incremental change: adjustments within existing frameworks
• Revolutionary change: fundamental alterations of institutions and power structures

Understanding this distinction helps explain variations in societal development.

Question 6

What key difference in political order development existed between British North America and Spanish America?

Answer 6

British North America had a decentralized federal structure, while Spanish America was more centralized and hierarchical.

This led to different levels of rights and institutional development.

Question 7

How did the Spanish Crown’s control over property rights affect economic development?

Answer 7

The Crown’s control discouraged long-term investment by creating insecurity in property rights.

This contrasted with the more secure property rights in British North America.

Question 8

What challenges did newly independent Latin American nations face in establishing stable political systems?

Answer 8

• Weak state capacity
• Internal political instability
• Conflicts over resources and power
• Lack of consensus on political rules

These factors hindered the establishment of effective governance.

Question 9

What role did shared beliefs play in the stability of the U.S. political order after independence?

Answer 9

Shared beliefs provided legitimacy and facilitated cooperation among the populace.

This contrasts with the fragmented belief systems in Latin America.

Question 10

What are the fundamental requirements for establishing a stable and prosperous society?

Answer 10

• Securing basic rights
• Creating credible commitments by political officials

These elements are illustrated by the divergent paths of North and Latin America.

Question 11

What is the implication of the source regarding the role of political order in economic growth in Latin America?

Answer 11

Political order is a primary determinant of long-term economic growth, beyond just economic factors.

This suggests that political preconditions are crucial for development.

Question 12

What does the source argue about the legacy of Spanish colonial institutions?

Answer 12

The legacy hinders the establishment of stable political orders in post-independence Latin America.

This suggests the need for economic history theories to account for institutional legacies.

Question 13

How does the source link rent-seeking behavior to political order in Latin America?

Answer 13

Weaker political order and lack of credible commitments contribute to the prevalence of rent-seeking behavior.

This indicates fundamental causes of economic challenges.

Question 14

Fill in the blank: A _______ commitment is crucial for fostering economic growth.

Answer 14

credible

This commitment ensures the protection of rights and enforcement of contracts.

Question 15

True or False: The US Constitution played a significant role in establishing a stable political order.

Answer 15

True

The Constitution provided credible commitments and protected rights.

Question 16

What are the implications of contrasting North and Latin America for economic history theories?

Answer 16

• Political order as a determinant
• Importance of credible commitments
• Need to account for colonial legacies

These insights challenge existing economic theories that overlook political factors.

Question 17

What does the source conclude about the early establishment of political order?

Answer 17

It significantly shaped the long-term economic development trajectories of both regions.

This emphasizes the importance of political foundations for economic outcomes.

Question 18

What fundamental role does ‘political order’ play in economic development?

Answer 18

A secure political order is a prerequisite for sustained economic growth.

Question 19

What is ‘Credible Commitment’?

Answer 19

A situation where individuals or groups have confidence that promises or agreements made by another party will be honoured and enforced.

Question 20

Define ‘Property Rights’.

Answer 20

The rights of individuals or entities to possess, use, and transfer assets.

Question 21

What are ‘Institutions’?

Answer 21

The formal and informal rules, norms, and organizations that structure interactions within a society.

Question 22

What does ‘Rent-Seeking’ refer to?

Answer 22

Behaviour aimed at capturing economic rents through manipulation of the political or economic environment.

Question 23

Explain ‘Path Dependence’.

Answer 23

The idea that past decisions and historical circumstances can significantly influence future outcomes.

Question 24

What are ‘Shared Beliefs’?

Answer 24

Common understandings, values, and expectations held by a significant portion of a society.

Question 25

What is 'Colonial Legacy'?

Answer 25

The lasting impact of colonial rule on the political, economic, and social structures of a region after independence.

Question 26

Define 'Federalism'.

Answer 26

A system of government in which power is constitutionally divided between a central authority and constituent political units.

Question 27

What is 'Mercantilism'?

Answer 27

An economic theory emphasizing national wealth through the accumulation of gold and silver and significant state intervention.

Question 28

What are the key characteristics of a stable and growth-promoting 'political order'?

Answer 28

1) Clearly defined and enforced rights, 2) Consistent rules and enforcement mechanisms, 3) Credible commitments by the state.

Question 29

Why was establishing credible commitments more challenging in post-independence Latin America?

Answer 29

Weaker traditions of self-governance, fragmented political landscapes, and entrenched social hierarchies.

Question 30

How did the structure of property rights differ between Spanish America and British North America?

Answer 30

Spanish America had less secure and more concentrated property rights; British North America had more clearly defined and widely distributed rights.

Question 31

What role did 'credible commitment' play in the economic success of the early United States?

Answer 31

It provided a framework for credible commitments regarding property rights and enforcement of contracts.

Question 32

What is the primary lesson from the historical comparison of Latin America and North America?

Answer 32

The importance of establishing a secure and credible political order for sustained economic development.

Question 33

Fill in the blank: The legacy of Spanish colonialism resulted in _______ political orders in Latin America.

Answer 33

less stable

Question 34

True or False: The authors argue that resource endowments are the primary reason for the contrasting development trajectories of Latin and North America.

Answer 34

False