Why Nations Fail

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Ebook : http://www.filedropper.com/why-nations-fail

Why Nations Fail: The Origins of Power, Prosperity, and Poverty, first published in 2012, is a non-fiction book by Turkish-American economist Daron Acemoglu from the Massachusetts Institute of Technology and British political scientist James A. Robinson from the University of Chicago.

The book applies insights from institutional economics, development economics and economic history to understand why nations develop differently, with some succeeding in the accumulation of power and prosperity and others failing, via a wide range of historical case studies.

The authors also maintain a website (with a blog inactive since 2014) about the ongoing discussion of the book.[1]

Content[edit]

In fifteen chapters, Acemoglu and Robinson try to examine which factors are responsible for the political and economical success or failure of states. They argue that the existing explanations about the emergence of prosperity and poverty, e.g. geography, climate, culture, religion, or the ignorance of political leaders are either insufficient or defective in explaining it.

Acemolgu and Robinson support their thesis by comparing country case studies. They identify countries that are similar in many of the above-mentioned factors, but because of different political and institutional choices become more or less prosperous. The most incisive example is Korea, which was divided into North Korea and South Korea in 1953. Both countries’ economies have diverged completely, with South Korea becoming one of the richest countries in Asia while North Korea remains among the poorest. Further examples include the border cities Nogales (Sonora, Mexico) and Nogales (Arizona, USA). By referencing border cities, the authors analyze the impact of the institutional environment on the prosperity of people from the same geographical area and same culture.

Acemoglu and Robinson’s major thesis is that economic prosperity depends above all on the inclusiveness of economic and political institutions. Institutions are “inclusive” when many people have a say in political decision-making, as opposed to cases where a small group of people control political institutions and are unwilling to change. They argue that a functioning democratic and pluralistic state guarantees the rule of law. The authors also argue that inclusive institutions promote economic prosperity because they provide an incentive structure that allows talents and creative ideas to be rewarded.

In contrast, the authors describe “extractive” institutions as ones that permit the elite to rule over and exploit others. Nations with a history of extractive institutions have not prospered, they argue, because entrepreneurs and citizens have less incentive to invest and innovate. One reason is that ruling elites are afraid of creative destruction—a term coined by Austrian economist Joseph Schumpeter—the ongoing process of annihilating old and bad institutions while generating new and good ones. Creative destruction would fabricate new groups which competing for power against ruling elites, who would lose their exclusive access to a country’s economic and financial resources.

The authors use the example of the emergence of democratic pluralism in Great Britain after the Glorious Revolution in 1688 as being critical for the Industrial Revolution. The book also tries to explain the recent economic bloom in China using its framework. China’s recent past does not contradict the book’s argument: despite China’s authoritarian regime, the economic growth in China is due to the increasingly inclusive economic policy by Deng Xiaoping, the architect of China’s Opening up policy after the Cultural Revolution.

According to Acemoglu and Robinson’s framework, economic growth will change the economic resource distribution and thus affect political institutions. Therefore, despite the current rapid growth, if China doesn’t improve its political inclusiveness, China is expected to collapse like the Soviet Union did in the early 1990s.

E – Economy’s output of a certain year

C – Cost of revolution

P – Punishment for the ruling class if revolutionaries take over

t– Tax rate imposed by the rich

B – Benefits of revolution

These variable affect the game as follows:

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This talk was given at a local TEDx event, produced independently of the TED Conferences. Why do some states enjoy wealth, security, health and nutrition while others face poverty, unemployment, lack of health care and safety?

James Robinson is a political scientist and economist. Professor Robinson teaches Economics, History and Government at Harvard University. His main research interests lie in the study of the economies of
developing countries. He travels a lot in Latin America and Africa and spends
his summers teaching at the University of Bogota. In 2012, he was elected
Fellow of the American Academy of Arts and Sciences. In 2007, James Robinson and Daron Acemoglu coauthored the book “Economic Origins of Dictatorship and Democracy”. The book was considered the best book released on U.S. policy and international relations. Their latest book, “Why Nations Fail”, was included in the ten best releases of the 2012 list in
Washington Post.

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