Country's Wealth Depends on Citizens' Share of National Pie

Over the years, experts have pointed to a range of factors they considered crucial—from the relative freedom of markets, through the size of the population, to geography.

James Robinson, coauthor of the newly published Why Nations Fail and contributor to The Occupy Handbook argues that the wealth of a country is most closely tied to how far the average person is able to share in its overall economic growth. He calls that “inclusive growth.”

However, he notes that there is always a tendency in any society for a small group of people to try and concentrate power and wealth in its hands.

In an interview with IMF Survey, Robinson elaborated on his theory of economic development.

IMF Survey: What can countries do to achieve economic success?

Robinson: To have economic success, you need a particular sort of configuration of economic and political institutions in society that sort of back them up and underpin them.

What you need in terms of the economy is a structure of economic institutions which can harness the talents and skills and ideas of its people. We call that inclusive because it has to allow everybody to have property rights and economic opportunities, to take advantage of their skills and talents, to open business, and get an education. But behind that, you need to have a set of political institutions which distributes power broadly in society.

But there are always incentives to oligarchize power, and for some groups of people to try to capture power or take over power. Many are concerned that this big increase in economic inequality in the United States signifies a sort of oligarchization of the society.

IMF Survey: If the increase in inequality in the United States. is a potential signal of America becoming an oligarchy, would you say the Occupy Movement is a protest against this?

Robinson: Historically, there are many examples of how there have been challenges to the inclusive nature of U.S. political institutions. We tried to put Occupy Wall Street into that same sort of tradition of objecting and fighting back.

That is something which is very healthy about the society. It is very good for the long-run health—economic health and political health—of the U.S.

IMF Survey: How did previous social movements succeed in achieving what they struggled to do?

Robinson: One lesson for Occupy Wall Street is that they project this antipathy towards politicians and political parties.

Perhaps one can sympathize with some of that sentiment...