Chapter 34 — Key Takeaways
Measuring poverty
- Extreme poverty: $2.15/day (2017 PPP); ~700M people (9% of world); fallen from 36% in 1990
- Most progress in East/South Asia (esp. China); sub-Saharan Africa lags
Three theories of underdevelopment
- Geography (Sachs): climate, disease, landlocked; sets constraints but doesn't determine outcomes
- Institutions (Acemoglu-Robinson): inclusive vs. extractive; the strongest predictor of income
- Colonial legacy: slave trade, extractive regimes, artificial borders → lasting institutional damage
All three contribute. Any serious strategy must address all three.
Aid debate
- Sachs: big push of targeted aid can break the poverty trap
- Easterly: top-down aid rarely works; local "searchers" beat outside "planners"
- Middle ground: specific well-designed interventions work (deworming, bed nets, cash transfers); large vague programs don't
The RCT revolution (2019 Nobel)
Banerjee, Duflo, Kremer: test development interventions like medical treatments using randomized trials. Works: deworming, bed nets, conditional cash transfers. Doesn't work (as well): textbooks alone, some microfinance. Limitation: RCTs test specific interventions, not big institutional questions.
Case studies
- Bangladesh: bottom-up, NGO-heavy, export-driven success
- Rwanda: rapid growth under authoritarian governance (tension between growth and democracy)
- Haiti: persistent poverty from extractive history and weak institutions
- India: mixed — rapid urban/IT growth, persistent rural poverty