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Peter Leeson on Development and Capitalism

July 23, 2009

In a new paper, the George Mason economics professor makes the case that capitalism is the most progressive force in development. Consider it additional evidence for Paul Romer’s free economic zonesFrom the abstract:

An increasingly popular position holds that although markets can be important contributors to development, they can also undermine it. Evidence for capitalism’s effect on development is ambiguous and mixed. We should therefore be cautious and modest advocates of markets. I call this view “two cheers for capitalism.” This paper empirically investigates this view. I find that citizens in countries that became more capitalist over the last quarter century became substantially wealthier, healthier, more educated, and politically freer. Citizens in countries that became significantly less capitalist over this period endured stagnating income, shortening life spans, smaller gains in education, and increasingly oppressive political regimes. The data unequivocally evidence capitalism’s superiority for development and merit its unqualified endorsement. Full-force cheerleading for capitalism is well deserved and three cheers are in order instead of two. I conclude with a few thoughts about why some academics insist on pretending otherwise.

Emphasis mine.

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