Review of Mancur Olson's book The Rise and Decline of Nations

(published in 1982)
reviewed by Peter McCluskey, 1999-04-05.

This important book provides a strong argument that one of the causes of different economic growth rates in different countries is that events (such as military defeat) that sweep away large entrenched power structures make economies more efficient.

Special interest groups can create significant obstacles to economic progress by negotiating special privileges (import restrictions or complex tax breaks to protect businesses, inflexible contracts to protect the wages of union members, etc). Olson makes a strong case that the agreements involved in most such privileges take significant time to adopt, and that apparent disasters that remove most such agreements can benefit a nation for significant periods of time.

Caveat - I'm writing this review many years after I read the book, so my recollections of it are probably incomplete.