CGD in the News

Stop Blaming Poor Countries’ Poverty on Corruption — Sometimes It’s Just Bad Luck (Quartz)

August 1, 2017

From the op-ed:

And in terms of stacking the system in favor of the few, the outcomes look similar in rich and poor countries: inequality is little different nor, that suggests, is the impact of policies and institutions in driving inequality. The top 10% of households in the US shared 44% of total post-tax income in 2004 (the figure is higher today). In the UK, the top 10% share more than a third of total household income. The average for the 78 developing countries with data from the World Bank over the last five years is a top income share of 32%. At the least, if poor countries are more corrupt than rich countries, the elite in those countries must be remarkably less effective at using corruption to concentrate wealth.

So, if it isn’t their moral failings, why are poor countries poor? Over twenty years ago, an all-star economic cast made up of Larry Summers, Lant Pritchett, William Easterly, and Michael Kremer, with research assistance from a young Sheryl Sandberg, wrote a paper looking at economic growth worldwide. The paper was titled “Good Policy or Good Luck?” and concluded that luck was more important than policies in determining growth rates across decades. “The finding that much variation in growth rates is due to random shocks should induce caution in attributing high growth rates to good policy (or to a good ‘work ethic’)” they warned. That conclusion still holds. It is long past time to give up a sense of moral superiority over people in developing countries and stop blaming the poor for their poverty.

Read full op-ed here.