All over the world people eke out existences on the edge of subsistence. For these members of the “bottom billion,” the difference between survival and desperation is razor-thin. Policymakers and academics alike have expended considerable energies identifying policies that might raise the standard of living of the poorest members of our societies, as well as those that provide a partial safety-net against the worst outcomes. Yet, in spite of its obvious importance, we know very little about why some societies are more prone to the types of economic crises and recessions that threaten to plunge one-sixth of humanity below subsistence. This book seeks to add to our understanding of the determinants of such growth-rate volatility, and, by doing so, to change how we think about where economic development might come from for those currently mired in poverty.

Research on economic development is necessarily interdisciplinary, drawing insights from economics, sociology, history, geography, and, more recently, political science. Understanding the economic foundations of economic development is a prerequisite, but, as countless examples suggest, politicians do not heed economists' advice. What is rational for economists is not necessarily optimal for politicians whose incentive structures are influenced more by the imperatives of retaining power than of maximizing economic growth. Where these incentives overlap good things can happen. Indeed a primary insight behind those who advocate the adoption of democratic governments in the developing world is that, by making leaders accountable to their publics, democracies build in a motivation to promote economic development.