Recently I read the book Why the nation failed: the origin of power, prosperity and poverty Daron Essemoglu and James A. By Robinson. Why the nation fail is of course a very important question, but an economist often runs away from far away because it is so versatile. In this book, however, the authors argue that a sufficient position for a nation is to fail (in the long run) to extract instead of inclusive institutions. The nation may fail for other causes (eg, disease, famine, war), but the presence of highly extract institutions is a certain method for nations. Inclusive institutions are political and economic systems that strengthen a broad population, protect rights and encourage development. Extractive institutions are established to benefit those people in power. The writers note that geography and culture matters for the success of a nation, but the nation will fail if a society is ruled through extracting instead of inclusive institutions.
To create this point, the author offers several examples. The most Stark is the case of Northern vs South Korea. Here, geography and culture are extremely similar. However, there are inclusive institutions in South Korea which have enabled innovation and development in recent decades; North Korea is ruled by an inactive, ruling rule, which has promoted opportunity to the general population and has created widespread poverty. The split cities of Nogels, Arizona (US) vs. Nogels, Sonora (Mexico) suggests how the US side thrives due to effective American institutions, while weaker and extracting Mexican institutions lead violence and stagnation on the southern side.
Another classic comparison: Western Europe vs Eastern Europe. There were political systems in western countries that eventually curb the elite’s privilege and Serfoom, which paved the way for economic development, while the history of Eastern Europe of Eastern Europe had stopped societies to stop.
Acemoglu and Robinson have warned that politicians are often wooed to extract, obtained for themselves, even it damages the population – generates a fight to protect the inclusive and important for national stability. The book argues that the inclusive institutes are the key to long -term development. They do not guarantee development-warehouses, disease and other factors can result in poor results-but the presence of inclusive institutions is an essential condition for long-term development. Those writers briefly explain their key points:
Countries become a failed state not because of their geography or culture, but due to their heritage of the institutions that control the state, which concentrates power and wealth in the hands of those who control the state, open the path of unrest, struggle and civil war.
– Why nations fail by Acemoglu and Robinson
You can read the whole book Here,
