Why Nations Fail

by Daron Acemoglu and James Robinson

This book helps us to understand today’s economic and political situations that countries face. It basicaly tries to find answers to this question, “Why some countries are so much poorer than the others?”

There are lots of theories to this question. Corruption and bad education is one of them. People who live in the poor countries talk about the corruption of the government, not receiving necessary public services and lack of equality of opportunities in their country. Some say that geograpy is the primary reason why poor countries are poor, for example Egypt since the country is mostly desert and lacks adequate rainfall and that its climate do not allow productive agriculture. Geograpy might be important but we can not say that it is the primary reason of why poor countries are poor. Rich countries became rich because their citizens over threw the elites who controlled power and created a society where the government was accountable and responsible to citizens, and where the great mass of people could take advantage of economic opportunities. It is not wrong to say that the people living in rich countries live longer, healthier and get much better education. They also have lots of options in life, like vocation and career paths. Of course these opportunities are only a dream to the people in poor countries.

Basically nations fail when they have extractive economic institutions because they cannot generate sustained technological change.

Reasons are:

The lack of economic incentives and resistance by the elites

Once all the very inefficiently used resources had been real located to industry.

During the nineteenth and twentieth centuries some nations were able to take advantage of the Industrial Revolution and the technologies and methods of organization that it brought while others were unable to do so. It can be said that this is the main reason why today world inequality exists.

We have lots of analysis in the book that helps us, and I would highly recommend it to everybody.