Evaluating a Hypothetical Natural Experiment
A political scientist argues that the 1950s division of a fictional country, Equatoria, into North and South provides a perfect natural experiment for comparing economic systems. Before the division, North Equatoria was heavily industrialized and wealthy, while South Equatoria was primarily agricultural and less developed. After the division, the North adopted a centrally planned economy, and the South adopted a capitalist economy. Forty years later, the South's economy has grown much faster than the North's.
Based on the principles of a valid natural experiment, critique the political scientist's argument. Is this a strong or weak example for isolating the causal effect of the economic system on growth? Explain your reasoning.
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Ch.1 Prosperity, inequality, and planetary limits - The Economy 2.0 Microeconomics @ CORE Econ
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