Uneven Progress (I)

This story of human progress has been uneven across countries. Europe, North America, and a few other locations have witnessed the greatest increases in real per capita income and the greatest decreases in poverty. By contrast, the standard of living and the extent of poverty in many African nations have changed little over the past 250 years.

Even within given countries, progress has sometimes been erratic. Ninety years ago, for example, the standard of living in Argentina was the sixth highest in the world; today, that nation ranks seventieth in living standards. In contrast, thirty years ago, 250 million people in China lived in abject poverty; that number has since been cut to one-tenth that number.

As you saw the key institutional factors that determine average levels of per capita income. Secure property and contract rights and the rule of law were the institutions under which the Industrial Revolution flourished best, and it is thus in nations that have embraced these institutions that people are most likely to be prosperous. These same institutions are the ones typically associated with capitalism, economic systems that depend primarily (though not necessarily completely) on markets to allocate scarce resources.