Why Nations Fail Book Review

The book Why Nations Fail has a lot of merits. Though it is black and white, with little nuancing, the book is well-researched and sure to stimulate debate. Among its main themes are: Institutional drift, Conflictual periods, Geographical differences, and Political equality.Institutional drift
Institutional drift is a phenomenon that affects societies at all levels. When institutions are not pluralistic and centralized, they tend to be more extractive. Inclusive political institutions, however, tend to resist such economic policies and encourage more inclusive economic behavior. This phenomenon was highlighted in the mid-14th century by the Black Death, which devastated the population of Europe and changed its economic future. The authors of this book describe this occurrence as a critical juncture, when one event can overturn a sociopolitical equilibrium and bring about a dramatic change.The authors of Why Nations Fail draw on decades of economic research to illustrate the relationship between economic and political institutions and the development of nations. They argue that geographic location and political institutions have a great deal to do with why some nations have become rich and others have remained poor. They cite the example of North and South Korea, where the former embraced communism after a civil war, while the latter adopted markets and democracy.Conflictual periods
Conflictual periods in history are an important part of explaining why nations succeed and fail. While states do not fall apart overnight, the seeds of destruction are sown deep into the political institutions. And sometimes, the failure is spectacular. For example, Afghanistan fell apart after the Soviets left and President Mohammad Najibullah was hanged, while Sierra Leone was ravaged by a decade-long civil war.The book also examines the reasons why countries suffer from extreme economic inequality. The author argues that this is largely due to poor decisions made by political leaders. Others suggest that it's because of culture, geography, or lack of knowledge. While Botswana has the fastest growing economy in the world, countries such as Sierra Leone and the Congo are stuck in a vicious cycle of poverty and violence.Geographical differences
While the geography of a country is important, there are other factors that contribute to a nation's economic success. For example, a country's culture and knowledge base are more important to its overall development than its geographic area. Consider the case of Nogales, Arizona, which is split between the United States and Mexico. Nogales residents have a higher standard of living than residents of neighboring Nogales, Sonora, and enjoy better health care, lower crime rates, and higher average household income. This phenomenon is called endogeneity.In Why Nations Fail, Acemoglu and Robinson argue that the failure of a nation can be traced to many factors. Among them is the lack of inclusive political and economic institutions. In a more inclusive political environment, a country's population is more likely to invest and innovate.Political equality
"Political equality is why nations fail," argues Daron Acemoglu, Elizabeth and James Killian Professor of Economics at MIT. According to Acemoglu, economic growth depends on widespread technological innovation, and only countries with an inclusive political system are likely to be able to encourage widespread innovation.Why Nations Fail outlines the institutional causes of failure and offers a new theory of political economy. It uses dozens of case studies to make its case. The book's authors have also published academic papers that develop the book's core ideas. The writing style is accessible, and it is free of jargon. However, the book's underlying thesis, that the state is the engine of economic growth, can come under criticism as a reductive attempt.Trade interdependence
One of the most prominent measures of economic interdependence is the ratio of international trade to total national income, although some studies have used total global trade and income instead. This ratio has risen considerably since World War II. This ratio is a common measure of interdependence, and studies of international relations often focus on the interdependence between nations. It is commonly calculated by dividing the annual volume of trade by the GDP of a single state.Economic interdependence is often linked with geopolitical power, but is not always the case. Countries tend to engage in trade more with neighbors who share common values and interests. In these cases, strategic considerations drive their economic ties. Shared features of a country may also help it grow economically.Political aristocracy
Political aristocracy is a key contributor to nation-state failure. Throughout the book, the authors use examples from the history of human civilizations to illustrate the detrimental effects of this system. They highlight the cases of ancient Rome, Ethiopia, and Mayan city-states. While these nations experienced rapid growth, it was only temporary and unsustainable unless they implemented more inclusive institutions. The authors also examine the impact of slavery in the US South, which was followed by the Civil Rights Movement, which led to racial equality and the growth of economies.In countries where political aristocracy is widespread, the ruling elites have the opportunity to accumulate huge amounts of wealth for themselves, and they have great incentives to do so. Ultimately, the result is persistent poverty.