Why Nations Fail
The Origins of Power, Prosperity and Poverty
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Now shortlisted for the Financial Times and Goldman Sachs Business Book of the Year Award 2012.Why are some nations more prosperous than others? Why Nations Fail sets out to answer this question, with a compelling and elegantly argued new theory: that it is not down to climate, geography or culture, but because of institutions. Drawing on an extraordinary range of contemporary and historical examples, from ancient Rome through the Tudors to modern-day China, leading academics Daron Acemoglu and James A. Robinson show that to invest and prosper, people need to know that if they work hard, they can make money and actually keep it - and this means sound institutions that allow virtuous circles of innovation, expansion and peace.Based on fifteen years of research, and answering the competing arguments of authors ranging from Max Weber to Jeffrey Sachs and Jared Diamond, Acemoglu and Robinson step boldly into the territory of Francis Fukuyama and Ian Morris. They blend economics, politics, history and current affairs to provide a new, powerful and persuasive way of understanding wealth and poverty. They offer a pragmatic basis for the hope that at 'critical junctures' in history, those mired in poverty can be placed on the path to prosperity - with important consequences for our views on everything from the role of aid to the future of China.
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I made it. I MADE IT! I never thought I'd make it.
Essentially a survey of world history, as interpreted through the lens of Acemoglu and Robinson's institutionalist theories, this was (a) a TOME that was a slog to read (like any good history book!), but (b) ultimately very rewarding, with numerous fascinating tidbits of information.
The basic thesis, which Acemoglu and Robinson repeat (perhaps over-repeat), is that the fate of nations rests on the relative extractive vs. inclusive institutional frameworks (both political and economic) which they create and are created by. So, for example, if your country has an extractive state that preys on its people, it's unlikely those people will have much incentive to invest or innovate (or even stick around, if they can help it). It's a relatively straightforward concept. I'm a microeconomist who every so often goes, “Oh yeeeeah - POLITICS can be a thing in economics too!”, and I've been sold on the institutionalist interpretation of development for a while (certainly as a better theory than a geographical determinist one, i.e. hot countries can't develop because it's just too damn hot and everyone gets malaria). So it was basically preaching to the choir.
What I was surprised by was the absence of Acemoglu and Robinson's work on using settler mortality rates as an instrument for whether colonies would adopt inclusive or extractive institutions. The colonial/settler story is there, but much more muted. And I find it quite interesting! (Especially from an empirical point of view, since finding good identification strategies for (1) macro (!?!), and (2) from the past (!!) seems a very thorny problem to me. But I digress!)
