Acemoglu and Robinson introduced the three main theories that you should or

shouldnt consider when you are dealing with the causes of world inequality; (1)
Geography hypothesis, (2) Culture hypothesis and (3) Ignorance hypothesis. The first
one is geography hypothesis which affirms that the great divide between rich and poor
countries is created by geographical differences. Montesquieu supported this theory
and argued that people in tropical climates tended to be lazy and to lack inquisitiveness.
The second theory, culture hypothesis, claims that that prosperity has something to do
with culture. Culture hypothesis no longer relies solely on religion, but stresses other
types of beliefs, values and ethics as well. And lastly, the ignorance hypothesis which
asserts that world inequality exists because the rulers do not know how to make poor
countries rich. Two of these theories, according to Acemoglu and Robinson, do not
answer the causes of world inequality for some reason that some countries show that
despite their geography, culture and ignorance, they can still attain prosperity while one
theory can explain at best a small part of world inequality.
This chapter provides explanations on what we should consider or what we must
use to understand the reason why some countries are richer than the others. Ignorance
hypothesis is the most appropriate or suitable theory to be used. The ignorance
hypothesis maintains that poor countries are poor because they have a lot of market
failures and because economists and policy makers do not know how to get rid of them
and have heeded the wrong advice in the past. The ignorance is present in the
institution that tends to separate economics from politics.
Economists ignore the fact that politics is relevant to explain world inequality.
Market failures or a situation in which the all individuals and firms cant freely produce,
buy and sell products or services that they wish is inevitable, thats why politicians are
expected to address those failures through policies that will help them to enhance its
economic situation. Some legislators favour elites with regards to their economic policy
to buy their support and to keep them in power without considering the welfare of the
state which is the reason why their state remains poor.
Since we are dealing with the causes of world inequality, we have to look first in
the microeconomic level. According to the book Why Nations Fail that we already noted

in the previous paragraph, the institution is the main issue why do some states remain
very poor despite the fact that they already addressed the market failures. If we are
going to connect this to Philippine politics, primarily we must look on the background of
elected officials in our government. We already know that Philippine politics is a game of
name recall and those who remain in power are the richest ones, considering the fact
that money is essential when you are running for a national position, i.e. congressman
and senator. Some politicians who came from an elite family produce policies that are
favourable to some well-off citizens rather than those who are living below the poverty
line because their way of living affects their way of thinking.

In other words, while much of the evidence may indeed show that politicians abuse power
and these types of institutions perpetuate bad economics, it certainly also makes sense that there
are some good (well-intentioned) politicians that follow bad economic policies out of ignorance. All
the same, it also seems reasonable to assume that sometimes bad politicians take advantage of
bad policies pushed forth by good politicians.