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Book : *_Why Nations fail*
Review:-Hamidullah.
This is a very interesting question. As a failed nation we ought to know the answer. This book blends
economics, politics and history to provide a powerful and persuasive way of understanding the origin of
prosperity and poverty.
I found this book very compelling. This is easy & entertaining to read. It is very coherent with compelling
arguments.
The book is co-authored by Daron Acemoglu professor of economics at MIT & James Robinson British
Economist.
󰀆󰀇󰀈In the first part he writes: Why do nations fail? Why Western Europe, North America & Japan are rich
& more prosperous than Sub- Saharan African countries, South American, and South Asian countries?
󰀆󰀇󰀈Second part writes, Do nations fail because of their geography? Culture? Ignorance? Or because
European people are more intelligent than other people in poor countries? Not at all. Daron Acemoglu
doesn’t believe in these theories. He support his opinions with logical arguments and debunked all these
reasons.
Daron Acemoglu says If Geography or culture should have played a role in the poverty & prosperity of
nations then there shouldn’t have been any differences between South Korea & North Korea. Both
countries are so close, separated by a just border, yet so different. South Korea is rich, prosperous, with
better living standards, education & health care. In contrast, North Korea is the opposite of it suffering in
poverty & dictatorship.
After reading the second chapter, firmly believe that we are not poor because we have born in wrong
part of the world or because our culture is bad or because our leaders do not know the right economic
policy.
But we are poor because those who have power intentionally make choices to create poverty.
So if not geography, culture & ignorance then what is it that leads countries to prosperity or poverty? Or
why nations fail then.
󰀆󰀇󰀈Third part, Here comes the core of the book: Inclusive economic & political institutions & Extractive
economic & political institutions. Rich, democratic, economically sound & stable countries have inclusive
institutions while poor, unstable, absolute, or dictatorial have extractive institutions in place.
Inclusive institutions involve pluralism, broader political participation & economic opportunities in
society for everybody, it allows innovation, entrepreneurship, property rights, rule of law, competition &
accountability of leaders. Examples are Western democracies.
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On the other hand, extractive institutions that wich extract incomes and wealth from one subset of
society to benefit a proper subset maintain the power of the narrow elite at the expense of society.
Absolutist & repressive regimes thrive under this model. The narrow elite maintains economic
monopolies to enrich themselves, ordinary people have no private property rights, political participation
& economic opportunities. Controlling elite doesn’t like change because their power would be
threatened by creative destruction so they resist inclusive institutions to take root & lead to democracy.
Examples are European absolute monarchies of the time & Ottoman monarchies, sub- Saharan
countries, south Asian countries of today. European monarchies didn’t become prosperous until they
gave up on extractive economic & political institutions in the 18
th
& 19
th
centuries & gradually marched
towards inclusive institutions & democracy.
󰀆󰀇󰀈 In part fourth he explains how institutions transform to inclusive through political conflicts and then
shape the future. He argues often small differences at critical juncture accumulate creating a process of
institutional drift.
󰀆󰀇󰀈In part five, he elaborates that extractive institution do make growth but it is not long lasting and
predict that china’s current economic growth would not last long, As Russia grew and collapse in just a
half century.
󰀆󰀇󰀈Parts six answer from where these institutional differences come from?
󰀆󰀇󰀈Part seventh explains how the institutional changes that flowed from glorious revolution and lead to
Industrial Revolution in Europe and why this occurred in Europe?
󰀆󰀇󰀈Part eight writes countries with extractive institutions and absolutist rule don’t encourage
innovations & change because the narrow elite prefers the existing political and social status quo it
would always resist change because of the fear of power loss. Ottoman empire banned printing press,
Austro-Hungarian empire & Russian monarchy resisted railways & industrial Revolution in the fear of
lose of power and creative destruction.
󰀆󰀇󰀈Part nine writes that the povety of underdeveloped word is rooted back in history.The European
during colonization impoverished, ransacked, stopped commercial and industrial activities in large parts
of the world, bumped up unequality in the modern world and reversed the ongoing economic
development.
󰀆󰀇󰀈Part ten discusses that some nations later followed Britain in industrial revolution. Why some nations
laged behind in technology and prosperity??
󰀆󰀇󰀈Part eleven and twelve elaborate that some steps create virtuous circle, a process of positive
feedback, while other create vicious circle.
Writers have researched for 15 years writing this book. Starting from the neolithic revolution about 10
thousand years ago to the 21
st
century. They found that inclusive economic & political institutions were
the key that led to the prosperity of nations, not the geography, culture or ignorance. As North & South
Korea example illustrates. While extractive economic & political institutions led to the poverty &
collapse of the countries.

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Book : *_Why Nations fail* Review:-Hamidullah. This is a very interesting question. As a failed nation we ought to know the answer. This book blends economics, politics and history to provide a powerful and persuasive way of understanding the origin of prosperity and poverty. I found this book very compelling. This is easy & entertaining to read. It is very coherent with compelling arguments. The book is co-authored by Daron Acemoglu professor of economics at MIT & James Robinson British Economist. In the first part he writes: Why do nations fail? Why Western Europe, North America & Japan are rich & more prosperous than Sub- Saharan African countries, South American, and South Asian countries? Second part writes, Do nations fail because of their geography? Culture? Ignorance? Or because European people are more intelligent than other people in poor countries? Not at all. Daron Acemoglu doesn’t believe in these theories. He support his opinions with logical arguments and debunked all these reasons. Daron Acemoglu says If Geography or culture should have played a role in the poverty & prosperity of nations then there shouldn’t have been any differences between South Korea & North Korea. Both countries are so close, separated by a just border, yet so different. South Korea is rich, prosperous, with better living standards, education & health care. In contrast, North Korea is the opposite of it suffering in poverty & dictatorship. After reading the second chapter, firmly believe that we are not poor because we have born in wrong part of the world or because our culture is bad or because our leaders do not know the right economic policy. But we are poor because those who have power intentionally make choices to create poverty. So if not geography, culture & ignorance then what is it that leads countries to prosperity or poverty? Or why nations fail then. Third part, Here comes the core of the book: Inclusive economic & political institutions & Extractive economic & political institutions. Rich, democratic, economically sound & stable countries have inclusive institutions while poor, unstable, absolute, or dictatorial have extractive institutions in place. Inclusive institutions involve pluralism, broader political participation & economic opportunities in society for everybody, it allows innovation, entrepreneurship, property rights, rule of law, competition & accountability of leaders. Examples are Western democracies. On the other hand, extractive institutions – that wich extract incomes and wealth from one subset of society to benefit a proper subset – maintain the power of the narrow elite at the expense of society. Absolutist & repressive regimes thrive under this model. The narrow elite maintains economic monopolies to enrich themselves, ordinary people have no private property rights, political participation & economic opportunities. Controlling elite doesn’t like change because their power would be threatened by creative destruction so they resist inclusive institutions to take root & lead to democracy. Examples are European absolute monarchies of the time & Ottoman monarchies, sub- Saharan countries, south Asian countries of today. European monarchies didn’t become prosperous until they gave up on extractive economic & political institutions in the 18th & 19th centuries & gradually marched towards inclusive institutions & democracy. In part fourth he explains how institutions transform to inclusive through political conflicts and then shape the future. He argues often small differences at critical juncture accumulate creating a process of institutional drift. In part five, he elaborates that extractive institution do make growth but it is not long lasting and predict that china’s current economic growth would not last long, As Russia grew and collapse in just a half century. Parts six answer from where these institutional differences come from? Part seventh explains how the institutional changes that flowed from glorious revolution and lead to Industrial Revolution in Europe and why this occurred in Europe? Part eight writes countries with extractive institutions and absolutist rule don’t encourage innovations & change because the narrow elite prefers the existing political and social status quo it would always resist change because of the fear of power loss. Ottoman empire banned printing press, Austro-Hungarian empire & Russian monarchy resisted railways & industrial Revolution in the fear of lose of power and creative destruction. Part nine writes that the povety of underdeveloped word is rooted back in history.The European during colonization impoverished, ransacked, stopped commercial and industrial activities in large parts of the world, bumped up unequality in the modern world and reversed the ongoing economic development. Part ten discusses that some nations later followed Britain in industrial revolution. Why some nations laged behind in technology and prosperity?? Part eleven and twelve elaborate that some steps create virtuous circle, a process of positive feedback, while other create vicious circle. Writers have researched for 15 years writing this book. Starting from the neolithic revolution about 10 thousand years ago to the 21st century. They found that inclusive economic & political institutions were the key that led to the prosperity of nations, not the geography, culture or ignorance. As North & South Korea example illustrates. While extractive economic & political institutions led to the poverty & collapse of the countries. Name: Description: ...
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