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LSO121: Policy Memo #2
Due Date: December 4, 2020
In his essay, Root Causes, the MIT economist Darren Acemoglu differentiates
between “good†and “bad†institutions (27). “Good†institutions encourage
investment and lead to economic prosperity, setting in motion of a virtuous circle of
equitable development and inclusive political institutions. “Bad†institutions
concentrate wealth and political power in the hands of a small elite, setting in
motion of a vicious circle of chronic underdevelopment and widespread poverty.
One of Acemoglu’s key contributions is his insistence that these institutions are not
natural or inevitable – they have a history. And that history is often the by-product
of the colonial adventures of powerful European states: where the Europeans left
behind a “good†institutional infrastructure – in the United States, Canada, Australia
and New Zealand – today we find prosperity and democracy. By contrast, where the
Europeans left behind a “bad institutional infrastructure – in Sub-Saharan Africa,
Latin America and Southeast Asia – today we find poverty and authoritarianism.
The purpose of your second policy memo assignment is to consider the economic
and political path whereby a set of “bad†institutions can be effectively converted
into a set of “good†institutions. In Part I of your memo, please describe the various
laws, policies and institutions of “good†regimes. What are the characteristic
features of these regimes, and why are they conducive to growth, prosperity and
democracy? In Part II, please describe why the absence of these “good†institutions
is so destructive of economic prosperity, individual well-being and political stability.
Finally, in Part III, please describe how an extractive regime be converted into an
inclusive one: What are the main impediments, both internal and external, for
effective economic and political reform? What are the necessary preconditions,
both internal and external, for effective economic and political reform?
Please make extensive use of assigned course material throughout your policy
memo, and be sure to provide practical examples whenever possible. You will also
find a dossier of helpful supplementary resources posted to the Assignments section
of Blackboard. Please pay close attention to the journal articles by Darren Acemoglu
(with various co-authors), which discuss all of the key ideas and concepts of
LSO431: the need to historicize institutions, the lingering impact of European
colonialism (good and bad), the necessary ingredients for prosperity and
democracy, and the path to effective economic and political reform in developing
contexts. Regarding the final theme – the path to prosperity – please pay careful
attention to Chapter 14 of Acemoglu and Robinson’s Why Nations Fail, which
describes the path to inclusive institutions in Botswana, the United States and China,
and to Joseph Stiglitz’s “Is there a Post-Washington Consensus Consensus?,†which
describes the international economic strategies conducive to the sustainable,
equitable development of the world’s poorest countries.
Directions and Reminders
A detailed grading rubric for this assignment is available on the Assignments section
of the LSO121 Blackboard website.
Spelling and grammar count. Your grade is based on constructing a convincing
argument and a poorly written paper is not very convincing. Essay style is also
important. You must have a clear thesis, which you set out to prove through
supporting claims backed up by evidence. I encourage you to make use of the
Writing Exchange program at the Seneca College Learning Centre
(https://inside.senecacollege.ca/learningcentres/writing-exchange).
Please make sure to properly cite all sources and to include all relevant references
in an attached bibliography. You may use any citation method (MLA, APA, Chicago,
etc.) you like as long as you do so consistently.
Please avoid cover sheets, but make sure to have a header. This header should
consist of your name, the course number and name, the date, the name of your
instructor, as well as the assignment (“Policy Memo #2”) in the upper left corner of
your review.
Students are required to submit an electronic copy of the assignment (in .docx
format) to Blackboard. Please keep electronic and hard copies of your assignments
before submitting them, as well as keep drafts and rough work until all assignments
have been returned.
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