Why Nations Fail explains the factors that lead to the success or failure of a nation including how a country’s own history affects its prosperity. Throughout the book, Daron Acemoglu and James Robinson illustrate their fifteen years of research, revealing how similarities in patterns can influence nations.
Although this book thoroughly compares the factors of economic success for several countries, each factor communicated related to countries’ successes must be be interpreted in an unambiguous or definitive manner. When analyzing the main themes of the book, the factors are laid out in a concise manner with historical evidence for proof. Because no certain independent variable can be applied to every country to ensure its prosperity, Acemoglu and Robinson’s theories are not universal. The authors provide historical evidence to show how politics create institutional drifting.The book goes through different nations, their origins of power, prosperity, and poverty. Each chapter tells about a different aspect of how nations have come to be: culture, geography, leaders, incentives, political conflict, etc. Why Nations Fail includes England, France, the United States, Japan, Botswana, and Brazil, and more.
In chapter one, the author writes, “Developing such an understanding is not just an end in itself, but also a first step toward generating better ideas about how to improve the lives of billions who still live in poverty.” Robinson and Acemoglu’s economic theories are based on institutions.In summary, chapters in Why Nations Fail examine hypotheses: geographical, cultural, and leadership. All of these are proven inadequate in chapters one and two. Leaders contribute to failure by not knowing what will enrich all of their citizens.
When the citizens’ needs aren’t being met, the system collapses. Incentives are essential in a well-functioning society. Incentives determine what kind of institution will exist. South Korea is a country that has incentive institutions, compared to North Korea. South Koreans are rewarded for contributing to economic growth.
Democratic countries are typically more gratifying because they give people increased freedoms. North Korea is a communist state that limits personal freedoms of expression, making it difficult.Acemoglu and Robinson challenge incentive institutions, claiming that extractive institutions can work. However, they will not last. By definition, extractive institutions have to create wealth for it to be extracted. Communism is a governmental system that enforces extraction. A ruler with a high amount of political power controlling a centralized state with a goal of control over production, the economy, and distribution is a prime example. Joseph Stalin of Soviet Russia was ruthless in his efforts to rapidly industrialize the country.
At the time, Westerners believed that the USSR could be the future. Collectivization ensured that the state would collect products and earn money. The collective farms lacked any incentive for workers, so it failed miserably and Russia’s working class starved to death. Although, the five-year-plans were a recipe for economic stagnation, it did generate some kind of growth. The use of force, fear, and corruption was also a motivation to work.Institutions evolve over time because of events called critical junctures.
Revolutions are a key part to the evolution and innovation, and are considered turning points.