Why Nations Fail

Book Review: Why Nations fail by Daron Acemoglu and James A. Robinson

What does the economy of Sub-Saharan African countries and China have in common? Or how do the modern states get their hands on Poseidon's Trident of 3 P’s (Power, Prosperity and Poverty)? Acemoglu and Robinson use their years of experience to provide the answers to these often complex questions in their books, Why Nations Fail published in 2012.

Diving into the first chapter of the book, the authors take a deep dive on why, how and which institutions play a key role in the establishment and development of the modern economies, going on to explain why development is a result of multiple underlying key factors that are often overlooked. The writers set the pace by drawing a classic comparison on why an average American is more prosperous than the neighboring Mexican while being 40 times more prosperous from the citizens of African countries like Mali and Sierra Leone. Terms like extractive, inclusive institutions, vicious circle will come repetitively providing the readers an insight on how and why the institutions can change any country. A collection of various studies ranging historic incidents dating back to Aztec civilization to modern day Mali has been cited to provide necessary data and answers to any questions that may obstruct a reader’s field of vision. One of the most intriguing studies was the new model of “Authoritarian Growth” that is experienced in China, which by many is an example of an extractive and centralized system. This type of system previously practiced by Russia might give temporary economic growth but fails in the long run due to the lack of inclusiveness. The studies show why many kings, families and even religious bodies tried to limit trade, resources and personal property which resulted in decreased incentive for the people to create anything that may bolster the economy and increase wealth. The meaning and conclusion is easy to grasp because people do not become more productive if they are given punishment for being less productive. The only downside of the book is the institution based analysis of inclusive vs extractive alongside absolutist, vicious circles becomes repetitive in the ending chapters making the reader feel burdened with the intensity of the information but the quality of the storytelling cannot be denied.

The authors have taken the responsibility upon their shoulders to write a book that would change the ways a general person looks at history and inspect the progress of economics, a gruesome and tough task that demands dedication, studies and convincing theories. Any reader who goes through this book will get to see the world with a new vision making the tasks of the writer successful. Why Nations Fail is not just a book that you read in your bed or with a coffee mug in hand, it’s one that demands your attention and keenness to absorb the insights about history, politics, institution and economics stored in a form of a Pandora's box, making it a must read to any seeker of policy and economic knowledge.