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Why Nations Fail: The Origins Of Power, Prosperity, And Poverty

Daron Acemoglu , James A. Robinson
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Why Nations Fail: The Origins Of Power, Prosperity, And Poverty

Daron Acemoglu , James A. Robinson
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Overall rating: 4.5 / 5 from 8 reviews.

AI Generated Review Summary

Summary topics

Review topics: ["power","institutions","book","arguments","circle","juncture","geography","america","growth","media","selections","group","writing","incentive","difference","culture"].

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Reviews

Great book

"Very clearly present the point. Why there is difference in economic situation of different countries. How inclusive system make the country grow on the contrary side exclusive system make just dictators rich but common people suffer poverty and corruption."

— Gurvinder W. (4/5)

Summary

"Below are my notes from Littler Books. I hope you find them helpful. 1. Nogales, Arizona, and Nogales, Sonora, are essentially the same city, sharing similar geography, climate, and culture, but the U. S. side is richer, safer, and healthier. The difference is their two different sets of institutions. a. Nogales, Arizona, benefits from U. S. economic institutions that ""enable them to choose their occupations freely, acquire schooling and skills,"" and political institutions that make the government accountable. The institutions in Nogales, Sonora are corrupt. 2. The two Koreas were culturally and geographically the same before their division after World War II. South Korea adopted a market economy with private property, while North Korea adopted a centrally controlled economy that banned private property and markets. The result is a tenfold gap in average income between the two. 3. Nations fail or succeed based on their economic and political institutions, not on geography, culture, or the ignorance of their leaders. 4. Commonly cited explanations for global inequality are flawed. a. The Geography Hypothesis: This theory claims a country’s environment makes it poor. History disproves this. The tropical regions of the Americas, home to the Aztec and Inca civilizations, were far more prosperous than the temperate zones of North America, but are no longer. The success of Singapore and Botswana, countries that share similar geography as struggling countries, also contradicts this theory. b. The Culture Hypothesis: This theory attributes prosperity to cultural traits, such as the Protestant work ethic. However, this cannot explain the divergence between North and South Korea, which share a common culture, or the vast differences in prosperity among former British colonies. c. The Ignorance Hypothesis: This theory asserts that poor nations fail because their leaders do not know which policies create prosperity. This is incorrect because leaders of poor nations often intentionally choose bad policies that benefit themselves. 5. “Poor countries are poor because those who have power make choices that create poverty. ” 6. The success of a nation depends on whether it’s inclusive or extractive. 7. Inclusive economic institutions ""allow and encourage participation by the great mass of people in economic activities that make best use of their talents and skills. "" 8. Inclusive political institutions are pluralistic and centralized. Pluralism means political power is broadly distributed and subject to constraints. Centralization means the state can enforce law and order and provide public services. 9. Extractive economic institutions ""are designed to extract incomes and wealth from one subset of society to benefit a different subset. "" They lack secure property rights, build entry barriers, and suppress markets. a. Examples include the encomienda and mita forced labor systems in colonial Latin America and slavery in the U. S. South. 10. Extractive political institutions concentrate power in the hands of a few elite and they have few constraints. This is also called absolutism. 11. “A businessman who expects his output to be stolen, expropriated, or entirely taxed away will have little incentive to work, let alone any incentive to undertake investments and innovations. ” 12. Inclusive political and economic institutions support each other. Those in power want the economy to do well, and the economy benefits from the system being more inclusive. This creates a virtuous circle. 13. Extractive political institutions enable elites to structure economic institutions to enrich themselves by taking away from others. This wealth, in turn, helps them get more power to extract. This creates a vicious circle. 14. Critical junctures (major events like revolutions, new technologies, plagues) can shape institutions. a. The Black Death (bubonic plague pandemic) in the mid-1300s created a labor scarcity that led to the collapse of feudalism in Western Europe. 15. Sustained economic growth depends on creative destruction, where new technologies replace the old. Elites of extractive institutions fear creative destruction because it could weaken their control. a. In 1589, William Lee invented the stocking frame knitting machine. Queen Elizabeth I refused to grant him a patent, saying, ""Consider thou what the invention could do to my poor subjects. It would assuredly bring to them ruin by depriving them of employment, thus making them beggars. "" She feared that the unemployed would create political instability, and thus threaten her power. 16. Growth is possible under extractive institutions (e. g. , by reallocating resources to highly productive sectors), but it is not sustainable. The concentration of power creates incentives for infighting for control. This often leads to civil wars and the collapse of the state. a. In Zimbabwe, Robert Mugabe’s government replaced white-minority rule but the new ruling elite still maintained repression and corruption. 17. European colonial expansion often reversed development in other parts of the world by imposing extractive institutions. a. The Atlantic slave trade turned many African societies into ""war machines intent on capturing and selling slaves. "" It left a legacy of absolutism that stunted development for centuries. 18. “Nations fail today because their extractive economic institutions do not create the incentives needed for people to save, invest, and innovate. Extractive political institutions support these economic institutions by cementing the power of those who benefit from the extraction. Extractive economic and political institutions, though their details vary under different circumstances, are always at the root of this failure. ” 19. Breaking the viscous circle is possible. It typically requires a critical juncture and a broad coalition that can challenge the existing elite. a. In 1688, a coalition of merchants, industrialists, gentry, and various political groups overthrew the Stuart monarchy, which ruled over the regions now known as Great Britain. This is known as the Glorious Revolution. 20. A free media is important for success. It empowers society to coordinate demands and expose abuses of power."

— Stlb (5/5)

Excellent book

"Why Nations Fail is a deeply insightful and well-researched book that explores the political and economic reasons behind the success or failure of nations. Acemoglu and Robinson present compelling arguments, backed by historical examples, to show how inclusive institutions drive prosperity while extractive ones lead to stagnation and collapse. The writing is clear and accessible, making complex ideas easy to grasp without oversimplifying them. Highly recommended for anyone interested in economics, history, or political science."

— Nik A. (5/5)

Well deserved Nobel.

"Thoroughly researched book. Enjoyed it thoroughly."

— Yashram B. (5/5)

Awesome Read!

"Amazing book that brakes down the role of institutions in the development of economies!"

— Stephen (5/5)

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

"I bought this for my brother’s birthday and have not read it myself. My brother is notoriously uncommunicative so I may never know if he enjoyed it. Interesting premise though — that the success or failure of a nation is not just based on luck and timing"

— Dcread (5/5)

A very interesting argument!

"The book brings about a very interesting and compelling argument! Worth the read."

— Katherine (4/5)

nice book

"nice book"

— Jay19 (3/5)

Q&A

  • Published date: Sep 17, 2013
  • Language: English
  • No. of Pages: 544
  • Publisher: Crown
  • ISBN: 9780307719225
  • Dimensions: 5.16" W x 1.18" L x 7.95" H
“Should be required reading for politicians and anyone concerned with economic development.”—Jared Diamond, New York Review of Books

“. . . bracing, garrulous, wildly ambitious and ultimately hopeful. It may, in fact, be a bit of a masterpiece.”—The Washington Post

“This is an intellectually rich book that develops an important thesis with verve. It should be widely read.”—Financial Times

“Why Nations Fail is a splendid piece of scholarship and a showcase of economic rigor.”—The Wall Street Journal

“The main strength of this book is beyond the power of summary: it is packed, from beginning to end, with historical vignettes that are both erudite and fascinating.”—The Observer (UK)

“A brilliant book.”—Bloomberg

“Why Nations Fail is a wildly ambitious work that hopscotches through history and around the world to answer the very big question of why some countries get rich and others don’t.”—The New York Times

“A wonderfully readable mix of history, political science, and economics, this book will change the way we think about economic development.”—Steven Levitt, coauthor of Freakonomics

“Without the inclusive institutions that first evolved in the West, sustainable growth is impossible, because only a truly free society can foster genuine innovation and the creative destruction that is its corollary.”—Niall Ferguson, author of The Ascent of Money

“Two centuries from now our great-great-great grandchildren will be, similarly, reading Why Nations Fail.”—George Akerlof, Nobel laureate in economics, 2001

“It’s the politics, stupid! That is Acemoglu and Robinson’s simple yet compelling explanation for why so many countries fail to develop. But they also document how sensible economic ideas and policies often achieve little in the absence of fundamental political change.”—Dani Rodrik, Kennedy School of Government, Harvard University

“A brilliant and uplifting book—yet also a deeply disturbing wake-up call.”—Simon Johnson, co-author of 13 Bankers and professor at MIT Sloan
 
“This highly accessible book provides welcome insight to specialists and general readers alike.”—Francis Fukuyama, author of The End of History and the Last Man and The Origins of Political Order

“This intimate connection between political and economic institutions is the heart of [the authors'] major contribution, and has resulted in a study of great vitality on one of the crucial questions in economics and political economy.”—Gary S. Becker, Nobel Laureate in Economics, 1992

“This not only a fascinating and interesting book: it is a really important one . . . to understanding the successes and failures of societies and nations.”—Michael Spence, Nobel Laureate in Economics, 2001
Daron Acemoglu is the Killian Professor of Economics at MIT. In 2005 he received the John Bates Clark Medal awarded to economists under forty judged to have made the most significant contribution to economic thought and knowledge. He is also the co-author of The Narrow Corridor: States, Societies, and the Fate of Liberty.

James A. Robinson, a political scientist and an economist, is the David Florence Professor of Government at Harvard University. A world-renowned expert on Latin America and Africa, he has worked in Botswana, Mauritius, Sierra Leone, and South Africa. He is also the co-author of The Narrow Corridor: States, Societies, and the Fate of Liberty.

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