PRAISE FOR Why Nations Fail. “Acemoglu and Robinson have made an important contribution to the debate as to why similar-looking nations differ so greatly in. Why Nations Fail: The Origins of Power, Prosperity and Poverty. Daron Acemoglu and James Robinson bring the big picture back into focus. In Why Nations Fail, an ambitious. 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.
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What makes countries end up in persistent and permanent poverty? Why is Mexico much poorer than the United States? Why is Latin America so. This, the authors contend, is why some nations fail. So, how are these institutions formed and developed? The authors postulate that it is the “interplay of small. Why Nations Fail: The Origins of Power, Prosperity and Poverty by Daron Acemoglu. Read online, or download in secure PDF or secure EPUB format.
Rogozinski alleges the authors in efforts to portray Carlos Slim as having unsuccessful business tactics in the United States due to the justice system, the authors reference Slim losing a CompUSA franchise court case in a Dallas Texas.
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This fact took place 6 years prior to the publication of the book was selectively ignored, although multiple newspaper articles in the United States published the story.
Ever since he has contacted the authors and the editors with the intention of learning of the foundations on which they based their research, and to provide them with evidence to clarify the truth of the documented facts.
One major issue of the authors' argument is endogeneity: if good political institutions explain economic growth, then what explains good political institutions in the first place? That is why Diamond lands on his own theory of geographical causes for developmental differences. He looks at tropical central Africa and America vs. Diamond's second criticism is that Acemoglu and Robinson seem to only focus on small events in history like the Glorious Revolution in Britain as the critical juncture for political inclusion, while ignoring the prosperity in Western Europe.
In response to Diamond's criticism,  the authors reply that the arguments in the book do take geographical factors into account but that geography does not explain the different level of development.
Acemoglu and Robinson simply take geography as an original factor a country is endowed with; how it affects a country's development still depends on institutions. They mention their theory of Reverse of Fortune : that once-poor countries like the U. They refute the theory of " resource curse "; what matters is the institutions that shape how a country uses its natural resources in historical processes.
Diamond rebutted  Acemoglu and Robinson's response, reinforcing his claim of the book's errors. Diamond insists geographical factors dominate why countries are rich and poor today.
Why Nations Fail
For example, he mentions that the tropical diseases in Zambia keep male workers sick for a large portion of their lifetime, thus reducing their labor productivity significantly.
He reinforces his point that geography determines local plantations and gave rise to ancient agrarian practices. Agricultural practice further shapes a sedentary lifestyle as well as social interaction, both of which shape social institutions that result in different economic performances across countries.
Diamond's review was excerpted by economist Tyler Cowen on Marginal Revolution. For example, geography plays an important role in shaping institutions, and weak governments in West Africa may be seen as a consequence of the unnavigable rivers in the region.
Sachs also questions Acemoglu and Robinson's assumption that authoritarian regimes cannot motivate economic growth. Several examples in Asia, including Singapore and South Korea, easily refute Acemoglu and Robinson's arguments that democratic political institutions are prerequisites for economic growth. Moreover, Acemoglu and Robinson overlook macroeconomic factors like technological progress e. In response to Sachs' critique, Acemoglu and Robinson replied on their book blog with twelve specific points.
First, on the role of geography, Acemoglu and Robinson agree that geography is crucial in shaping institutions but do not recognize a deterministic role of geography in economic performance.
Second, on the positive role authoritarian governments can play in economic growth, especially in the case of China, the fast economic growth could be part of the catch-up effect.
However, it does not mean that authoritarian governments are better than democratic governments in promoting economic growth. It is still way too early, according to Acemoglu and Robinson, to draw a definite conclusion solely based on the example of China.
Last, on industrialization, they argue that industrialization is contingent upon institutions. Based on Acemoglu and Robinson's response, Sachs wrote a rebuttal on his personal website. Sachs disagrees with the historical determinism that Acemoglu and Robinson propose, as Sachs believes that the actions taken by colonists two hundred years ago had no power in explaining economic performance today.
Sachs insists on retaining complexity geography, technological progress, etc. As Sachs describes, the evidence suggests that economic development is a multidimensional dynamic process, in which political, institutional, technological, cultural, and geographic factors all play a role.
Such a view of history might not be "powerful" in the sense that Acemoglu and Robinson would like, but it has the virtue of being accurate and useful. Mitt Romney[ edit ] Though Republican Party presidential candidate Mitt Romney never explicitly mentioned the book during his campaign, his comment "culture makes all the difference"  when commenting on what causes the different level of economic development between Israel and Palestine invoked a response from the two authors.
In an article called "Uncultured" on Foreign Policy ,  the authors point out Romney's fallacy. First, Romney conflated culture and institution. What he called "good work ethic" could be seen as culture on the surface but is essentially shaped by institutions with incentive structures. Furthering the arguments in the book, Acemoglu and Robinson refer to the Jewish education system and historical contingencies, none of which is cultural.
Why Palestine is less developed is simply because inclusive economic institutions were not able to develop there, due to the colonial occupation and regional political machination.
Lastly, the authors mention South and North Korea as an example against "culture" as determinant for economic development, as South and North Korea both came from the same homogeneous culture before splitting up and adopting different institutions. Based on the case of China, a centralized state can draw a country out from poverty but without inclusive institutions, such growth isn't sustainable, as argued by Acemoglu and Robinson.
Why do some countries enjoy prosperity, while others have been languishing in poverty and inequality for ages? What accounts for democratic and economic success in Europe, the United States, Australia and Japan and for persisting impecuniosity, conflicts, and authoritarianism in Sub-Saharan Africa? Why did the Industrial Revolution, a major turning point in the history, transpire in the eighteen century England and not in Mexico, Congo or Nepal?
Throughout the centuries, economists, political scientists, philosophers and other experts alike have been racking their brain over the answers to these questions e.
Adam Smith, ; Diamond, ; Landes, Some authors contend that the geographical differences are the main causes of the great cross-country differences in poverty and prosperity.
The so-called geography hypothesis draws its main argument on the works of the eminent French political philosopher Montesquieu , who links the hot climate to the laziness and the deficit of curiosity, while associates the vigour with the cold climate. American scientist Diamond bases his geographical determinism on the technological differences among the parts of the world, which according to him, was due to the availability of plant and animal species, which in turn resulted in the different paths of farming and technological change.
Noviembre , pp. Some claim that Protestant ethic contributed to the rise of modern industrial society in Europe Weber, ; others question the compatibility of Islam with democracy e.
Putnam et al. All in all, cultural theorists claim persuasively that religion and culture matters for the prosperity. Others opine that African countries are poorer than the countries of other regions because their leaders might be less informed, knowledgeable and less advised than their counterparts in other regions on how to lead the country.
The proponents of the so-called ignorance theory e. After having carefully albeit briefly analysed the rationales of three main strands of literature on elucidating the world inequality, the authors of the book we are reviewing, Daron Acemoglu Massachusetts Institute of Technology and James A. Robinson University of Chicago , gracefully counterattacks them one by one with arguments based on stories drawn from the human history and the contemporary state of arts of different countries and regions of the world.
Juxtaposing and analysing the historical development of South and North Korea and of the United States and Latin America, the academics illustrate that neither geography, nor the lack of knowledge and information of leaders, nor the cultural differences explain the strikingly different paths taken by otherwise not so different countries and regions. Instead, the economists suggest searching the answers for the challenging questions at the quality of institutions of the countries.
Thus, apart from being free markets, these institutions should also push for positive technological and educational changes in the society and be capable of harnessing the potential of individuals. Inclusive political institutions are pluralistic and vest powers broadly among the society members.
The foremost condition of inclusive political institutions is political centralisation, which is to impose law and order, at the same time protects the private property rights and encourages innovation and education. One of the premises of the book is that only working in tandem these institutions bring about growth and prosperity. At the other end of the spectrum there are the so-called extractive institutions.
In some regimes, the elite which hold the power tend to build up economic institutions with one goal: Extractive institutions also create a circle, although a vicious one, generating negative feedback loops and thus enduring for years and centuries. This, the authors contend, is why some nations fail. So, how are these institutions formed and developed? Similarly, the authors do not negate the existence of economic growth in the presence of extractive institutions.
Nonetheless, the academics believe that this growth cannot be sustained in the long-run as the case of the Soviet Union showed , as any growth built by extractive institutions without the support of inclusive political institutions is doomed to fail sooner or later. The challenge, the academics explicitly acknowledge, is building inclusive institutions and thus creating growth and prosperity in the terrain of extractive ones, which have been persisting during centuries.
Like these mentioned books, it is a compelling book, full of astounding stories and anecdotes from the human history. Douglass North, who is believed to have laid the theoretical framework of this thesis, states in North North, ; North et al.
However, this oeuvre has several shortcomings. Firstly, the determination of the authors to fully debunk the previous explanations of global inequality namely culture, geographic and ignorance hypotheses undermines the importance of a constellation of intertwining factors in leading the country towards the prosperity or poverty. The quality of institutions could be crucial in shaping the development path of countries, but the interplay of other factors, such as resource endowments of a country, its geopolitically favourable or disadvantageous position in the world map, unfortunate policies of the leadership, are sometimes equally important.
In fact, no single variable could be universally necessary and sufficient for democratic outcome for a country Diamond, Linz and Lipset, , and likewise we opine that no single factor could possibly suffice to elucidate the failure of nations. One big strand of literature e. Ross, ; Smith, contends that the oil wealth of resource rich developing countries has a robust negative correlation with authoritarianism. The presence of large oil income, they go on, hinders democratic transition in these countries.
The argument draws from rentier state theory, which links the oil wealth to numerous pervasive economic, political and social outcomes for nations e. Mahdavy, ; Beblawi and Luciani, Likewise, the natural resource endowments are argued to have contributed to the prosperity of some countries e. Norway with its fish, timber and subsequently oil and gas reserves; Botswana with its diamond. The oil wealth has been linked to growth and more democracy for Latin American countries e.
Dunning, ; Ross, Resources matter for the countries. So does the geography that determines it. Furthermore, there are still uncertainties about whether pre-existing institutions cause pervasive political and economic outcomes, or whether institutions are exacerbated by the resource curse Rajan, What is more, the authors extensively disregard the role of the international patronage to and external legitimacy of either poverty or prosperity in developing countries which could be due to the geopolitics of nations.
Azerbaijan, a Post-soviet country, richly endowed with oil and gas, is considered to be a strategic energy partner to the EU. Thanks to it being at the crossroads between Europe and Asia, the country boasts of owning a strategic BTC Baku-Tbilisi-Ceyhan oil pipeline transporting Caspian oil to Europe and is currently building new gas pipelines within the Southern Gas Corridor project of the European Union in order to provide Europe with non-Russian gas, which is to bypass the Russian territory.
Should Azerbaijan be situated in a different geographical location, we might have been talking about a different polity.
These are of course only few of many salient examples of how the geography does influence on economic and political development of a nation. It is rather concentrated on what institutions could bring about for the prosperity of a nation. One needs to guess what the authors mean by economic and political institutions throughout the book, and only after having read the whole pages book you can vaguely deduce what they could have had in their mind for institutions.
It would have been fairly understandable, if the definition of the concept was purposefully left out by authors, if the work was meant for an expert circle. However, what makes this book enthralling is precisely its simplicity in exposing complicated historical dynamic of world institutions with anecdotic stories.
That leaves little room for doubt that the oeuvre is meant for general public. Nonetheless, perhaps more evidence-based academic work by the authors of this book could offset this shortcoming e.
Acemoglu et al. Furthermore, Why Nations Fail is packed albeit gracefully with repetitions. Despite the above mentioned shortcomings, it is undeniable that Why Nations Fail is a captivating book, which nests gargantuan chunks of human history within the suggested framework of inclusive vs. Acemoglu, Daron and James. Working Paper. National Bureau of Economic Research. Cambridge, MA. Aghion, Phillippe and Peter Howitt. The Economics of Growth: Cambridge, Mass. The rentier state Nation, State and Integration in the Arab world.
Diamond, Jared. New York, London: W. Diamond, Larry, Juan J. Linz and Seymour Martin Lipset eds. Democracy in Developing Countries. London: Adamantine press. Lynne Rienner.
Dunning, Thad. Crude Democracy. Natural Resource Wealth and Political Regimes. New York: Cambridge University Press.
Kramer, Martin. Landes, David. The Wealth and Poverty of Nations. Why some are so rich and some so poor, New York, London: W.
Why Nations Fail
Lionel Robbins, in Acemoglu and Robinson. Why Nations Fail, The origins of power, prosperity and poverty. London: Profile Books Ltd. Mahdavy, Hussein. Cook ed. London: Oxford University Press. McNeil, William Hardy. The rise of the West. A history of human community.
Chicago: University of Chicago Press. Why Nations Fail.Guns, Germs and Steel: These are of course only few of many salient examples of how the geography does influence on economic and political development of a nation. The Price of Inequality: Henry Kissinger. Add to Cart About Why Nations Fail 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?
Linz and Seymour Martin Lipset eds. Dunning, Thad. The Great Divide: