Home Economics ​​Why Nations Fail

​​Why Nations Fail
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Learn the key ideas of the book by Daron Acemoglu , James A. Robinson

​​Why Nations Fail

What makes a country rich?

Why are some nations wealthy while others remain poor? This is a crucial question of the modern era, which Daron Acemoglu and James Robinson, university professors, political scientists, and economists, attempt to answer in Why Nations Fail. Using examples from history, they analyse how political and economic institutions determine whether a nation is wealthy or poor, healthy or disease-ridden, well-fed or hungry, and so on. The book provides explanations as to why North Korea is one of the poorest countries in the world, while South Korea is one of the most developed, and why China is in danger of collapsing in the same way as the Soviet Union did in the early 1990s, and much more. This is a must-read for politicians, political scientists, development economists, and anyone who wants to help put an end to inequality.

​​Why Nations Fail
Read in 16 min.
Listen in 20 min.

Nations do not fail because of their geographical location

Why are some nations poor while others are rich? This is an extremely complex and challenging question to answer, but we can start by analysing the history of various countries. It is important to examine the root causes of inequalities, and to explore the different governmental systems, in order to find solutions to bridge the enormous gap between rich and poor countries.

There are many misconceptions surrounding the reasons why nations fail, but history teaches us that most of these hypotheses are without grounds. The city of Nogales, for instance, is located on the border between Arizona and Mexico; it is divided into two very distinct parts: the relatively well-off American side of the border, and the much poorer Mexican side.

According to the geographical hypothesis, some nations are more prosperous because they are lucky enough to be located in places with a pleasant climate. However, the poorest countries in the world are almost all found in tropical regions, while the richest countries are located in climatically cooler areas. Ecologist and evolutionary biologist Jared Diamond put forward the theory that people living in warmer countries tend to be lazier and less productive than those living in countries with a milder climate. Diamond also says that the higher rates of disease in the tropical areas of Central Africa and Central America mean that a person living in Zambia, for instance, will be less productive than someone living in Norway.

So why do countries like North and South Korea have such divergent economies? Why is Singapore so prosperous despite its tropical climate? Why do the inhabitants of both parts of Nogales, who experience the same rates of disease and climate, have such different standards of living?


The key ideas of "​​Why Nations Fail"

Nations do not fail because of their geographical location
A country’s culture and religion do not influence its prosperity
Developed countries have more inclusive economic and political institutions, while those in developing countries tend to be extractive
Critical junctures in history lead to institutional drifts
Inclusive policies generate inclusive economies that, in turn, create inclusive policies; extractive policies generate stagnant economies
Some economies, such as China, have been successful, despite their extractive institutions
Democracy also evolves through revolutions
Foreign aid is not always helpful in bringing about change
Take-home message
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