Why have Economies of Sub-Sahara Africa Failed? Volume 2 According to the ignorance hypothesis on development, countries such as those in SSA are poor because their rulers do not know how to make them rich. This view assumes that if “economics is a science which studies human behavior as a relationship between ends and scarce means which have alternative uses,” then the science of economics should focus on the best use of scarce means to satisfy social ends. For example, the First Welfare Theorem identifies the circumstances under which the allocation of resources in a “market economy” is socially desirable, viewing a market economy as an abstraction meant to capture a situation in which all individuals and firms can freely produce, buy, and sell any products or services that they wish. When these circumstances are not present there is a “market failure.” Such failures provide the basis for economic stagnation, because the more that market failures go unaddressed, the poorer a country is likely to be. The ignorance hypothesis thus argues that poor countries such as Burkina Faso, Mali and Senegal are poor because they have a lot of market failures and because their rulers do not know how to get rid of them and have heeded the wrong advice in the past. Rich countries like the US and Canada are rich because rulers there have figured out better policies and have successfully eliminated market failures.
Posted on: Mon, 08 Dec 2014 16:06:16 +0000
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