The Political Economy of Nation Building: The World's Unfinished Business

by Mack Ott

Overview

Donor nations may advise and counsel, but the creation of a liberal nation state falls to its own people. They must create laws, exercise their liberties, provide freedom of belief and expression, and protect individual property rights. No nation becomes or remains free unless its people build, use, and defend these institutions, and protect them with understanding, vigilance, and effort. The Political Economy of Nation Building reviews the effects of political structures on the evolution and stability of liberalism in developing nations and considers the outlook for their success.Discussing the origins and applications of the modern liberal state from an explicitly Anglo- and Euro-centric view, Mack Ott addresses the origins of the rule of law and innovations that led to the rise of a market economy, separation of faith and governance, and the autonomy of finance - key components of the liberal state. He then addresses the emergence of sustained economic growth, a bridge between the liberal infrastructure and its application during the construction of a nation.Ott examines budget policy and laws, and accurate and timely economic and financial statistical reporting that assure donors that the recipient government is operating within the constraints of law. He addresses the beneficial effects of privatization of state-owned industry, examines the costs and benefits of nurturing non-governmental associations, and concludes with a review of transparent fiscal and monetary policies and the importance of non-interference in financial markets by the state.

Product Details

ISBN-13:	9781412847421
Publisher:	Transaction Publishers
Publication date:	07/15/2012
Pages:	438
Product dimensions:	6.20(w) x 9.20(h) x 1.10(d)

About the Author

Mack Ott, an international economic consultant, most recently at the State Bank of Vietnam, has been a policy advisor to more than thirty countries, from Nigeria to the Marshall Islands to Mongolia and Saudi Arabia. He has been an economics professor at Virginia Tech and Penn State and a visiting professor at the University of Michigan, Tblisi State University, Erasmus University, and the Institute for Higher Finance, St. Petersburg.

Table of Contents

List of Tables and Figures ix

Foreword James Lyon xi

Preface xvii

Prologue: Origins of the Liberal Nation-State xix

1 The Rule of Law, the Evolution of the Common Law, and King in Parliament 1

2 The Decline of Feudalism and the Rise of Free Labor, Private Property, and the Market 29

3 Separation of Faith and Governance, the Rise of Literacy, and the Emergence of Civil Society 57

4 The Autonomy of Credit and Finance 85

5 The Complex Quest for Economic Growth 113

6 Steps and Missteps in Nation Building 145

7 The Rule of Law and Matters of Good Governance 173

8 Privatization and the Expansion of the Middle Class 205

9 Nurturing Civil Society and Tolerance 237

10 Money, Credit, and Transactions-Enabling Financial Development 267

11 Economic Growth and Inequality 295

Epilogue: Nation Building and the Security of Freedom 323

Selected Bibliography 355

Illustration Credits 383

Index 385

Editorial Reviews

"Ott (international economic consultant; former academician) offers a spirited defense of civil and political liberties, property rights, and wealth creation as a handmaiden for world peace. The first half of the book deals with the history of the development of the liberal nation-state and market economy. Ott describes the institutions underpinning the modern nation-state and where they originated (mostly in England); the growth of property rights necessary for the functioning of a market economy; the rise of literacy and civil society; the development of finance; and the quest for sustained economic growth and its relationship to income inequality. The sixth chapter provides a review of the success and failure of policies in selected less developed countries. Chapters in the second half of the book discuss policies to create the institutions necessary for nation building. The analysis revolves around the importance of good governance; the beneficial effects of privatization of state-owned enterprises; the costs and benefits of nurturing civil society; the role of salubrious fiscal and monetary policies; and the effects of income redistribution on economic growth. The epilogue includes a brief discussion of China, noting that the government may bend—gradually, to calls for greater democracy. Summing Up: Recommended." —S. Paul, Choice “In this paradigm-busting exploration of the roots of the liberal nation-state, Ott, an international economic consultant and policy advisor who has taught at universities around the world, picks apart the very foundations of the Western model to get to the heart of the societal, political, and economic developments that enabled the modern liberal, democratic nation-state to emerge and evolve, with a view toward understanding what is wrong with current foreign assistance and development policies. Ott questions and deconstructs the prevailing Western developmental paradigm used by the World Bank, the International Monetary Fund, and the US and other donor nations and offers political and economic advice for policy makers in the West who are dealing with the challenges of the developing world. Cases compare the policies of five pairs of less-developed countries over the past twenty years, illustrating the contrasting effects of these policy stances on law, property, civil and economic liberties, and economic growth. The author concludes with steps for creating the institutions required for nation building and warns of the dangers to democracy for not taking these steps.” —Book News “The basic lesson is that a liberal nation-state is required to nurture economic development. Ott provides a list of key characteristics. It includes the rule of law, private property and a substantial middle class, religious tolerance and the separation of legislative and executive powers, which permits the development of sound fiscal and monetary policies. Ott argues that these factors, first developed in England between the Norman Conquest and around 1700, explain the country’s economic takeoff and should be the model for today’s developing countries.” —Martin Hutchinson, Reuters Breaking Views “The Political Economy of Nation Building clearly and carefully demonstrates that several other institutions must be in place before a universal-suffrage democracy can be effectively established. In fact, successful democracies are the end result of long evolutionary processes that includes prior development of rule of law, separation of powers, private property and strong middle class, a vibrant civil society, an autonomous financial/credit system and separation of religion and the state. This book should be read with great care by decision-makers in the US State Department, the World Bank, the IMF, and every other organization attempting to spread democracy around the world by demanding its establishment as a condition for receiving development aid, or through the use of or threat to use military force. Foundations must be in place before a roof can be built.” —Bruce L. Benson, DeVoe Moore and Distinguished Research Professor, department of economics, Florida State University “Thanks to a remarkable coincidence of experience and interests, Mack Ott has produced a book that is both timely and insightful. Many scholars carry with them academic backgrounds in economics and hands-on experience in less-developed countries. Ott’s uniqueness comes in joining them with a lifelong love of history. Taken together they provide a perspective from which he derives remarkable insights about both old and new nations, and about their many possible futures.” —Robert Michaels, professor of economics, California State University, Fullerton “Americans, notoriously, ‘don't do nation-building.’ At least, they don’t like doing it outside their hemisphere. But here comes Mack Ott to take over where Francis Fukuyama gave up, with The Political Economy of Nation-Building. It’s . . . a thoughtful analysis of liberal democracy and how emerging economies can get there, especially post-9/11 and after the financial crisis of 2008. . . . Mack firmly believes in the message of spreading prosperity world-wide . . . and he sets out clearly the reasons why he believes nation states will survive and outlive the emerging modern networks and trends towards world governance.” —Adrian P. Hewitt, head of the ODI Fellowship Scheme; research fellow, Overseas Development Institute

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