Why Nations Fail: The Origins of Power, Prosperity, and Poverty

Why Nations Fail: The Origins of Power, Prosperity, and Poverty

Daron Acemoglu, James Robinson

Language: English

Pages: 544

ISBN: 0307719227

Format: PDF / Kindle (mobi) / ePub

Brilliant and engagingly written, Why Nations Fail answers the question that has stumped the experts for centuries: Why are some nations rich and others poor, divided by wealth and poverty, health and sickness, food and famine?

Is it culture, the weather, geography? Perhaps ignorance of what the right policies are?

Simply, no. None of these factors is either definitive or destiny. Otherwise, how to explain why Botswana has become one of the fastest growing countries in the world, while other African nations, such as Zimbabwe, the Congo, and Sierra Leone, are mired in poverty and violence?

Daron Acemoglu and James Robinson conclusively show that it is man-made political and economic institutions that underlie economic success (or lack of it). Korea, to take just one of their fascinating examples, is a remarkably homogeneous nation, yet the people of North Korea are among the poorest on earth while their brothers and sisters in South Korea are among the richest. The south forged a society that created incentives, rewarded innovation, and allowed everyone to participate in economic opportunities. The economic success thus spurred was sustained because the government became accountable and responsive to citizens and the great mass of people. Sadly, the people of the north have endured decades of famine, political repression, and very different economic institutions—with no end in sight. The differences between the Koreas is due to the politics that created these completely different institutional trajectories.

Based on fifteen years of original research Acemoglu and Robinson marshall extraordinary historical evidence from the Roman Empire, the Mayan city-states, medieval Venice, the Soviet Union, Latin America, England, Europe, the United States, and Africa to build a new theory of political economy with great relevance for the big questions of today, including:

   - China has built an authoritarian growth machine. Will it continue to grow at such high speed and overwhelm the West?
   - Are America’s best days behind it? Are we moving from a virtuous circle in which efforts by elites to aggrandize power are resisted to a vicious one that enriches and empowers a small minority?
   - What is the most effective way to help move billions of people from the rut of poverty to prosperity? More
philanthropy from the wealthy nations of the West? Or learning the hard-won lessons of Acemoglu and Robinson’s breakthrough ideas on the interplay between inclusive political and economic institutions?

Why Nations Fail will change the way you look at—and understand—the world.

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decline. On the surface of it, Argentina’s economic performance is puzzling, but the reasons for its decline become clearer when looked at through the lens of inclusive and extractive institutions. It is true that before 1914, Argentina experienced around fifty years of economic growth, but this was a classic case of growth under extractive institutions. Argentina was then ruled by a narrow elite heavily invested in the agricultural export economy. The economy grew by exporting beef, hides, and

breeding mules for the miners in Potosí to the north. In fact, La Rioja was much more like the area of Potosí in Peru and Bolivia than it was like Buenos Aires. In the nineteenth century, La Rioja produced the famous warlord Facundo Quiroga, who ruled the area lawlessly and marched his army on Buenos Aires. The story about the development of Argentine political institutions is a story about how the interior provinces, such as La Rioja, reached agreements with Buenos Aires. These agreements were a

20, 1956. It set in motion a process that culminated in the U.S. Supreme Court ruling that the laws that segregated buses in Alabama and Montgomery were unconstitutional. The Montgomery Bus Boycott was a key moment in the civil rights movement in the U.S. South. This movement was part of a series of events and changes that finally broke the mold in the South and led to a fundamental change of institutions. As we saw in chapter 12, after the Civil War, southern landowning elites had managed to

Century England.” Journal of Economic History 49: 803–32. Nove, Alec (1992). An Economic History of the USSR 1917–1991. 3rd ed. New York: Penguin Books. Nugent, Jeffrey B., and James A. Robinson (2010). “Are Endowments Fate? On the Political Economy of Comparative Institutional Development.” Revista de Historia Económica (Journal of Iberian and Latin American Economic History) 28: 45–82. Nunn, Nathan (2008). “The Long-Term Effects of Africa’s Slave Trades.” Quarterly Journal of Economics

A SMALL DIFFERENCE THAT MATTERED Absolutism crumbled in England during the seventeenth century but got stronger in Spain. The Spanish equivalent of the English Parliament, the Cortes, existed in name only. Spain was forged in 1492 with the merger of the kingdoms of Castile and Aragon via the marriage of Queen Isabella and King Ferdinand. That date coincided with the end of the Reconquest, the long process of ousting the Arabs who had occupied the south of Spain, and built the great cities of

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