Why Nations Fail: Culture, Religion, Geogrpahy?

Why do some nations succeed while others fail?

Is it geography? Politics? Open trade? Religion?

In “Why Nations Fail” — published almost a decade ago — the authors (Daron Acemoğlu und James A. Robinson) answer such questions.

The main thesis (the answer to why some nations fail) is: Corruption.

A bit more explanation: Pluralistic, inclusive institutions are pre-requisites to successful countries.

The book cites numerous examples to prove this thesis.

The book opens by contrasting two cities belonging to two different countries. These two cities are located on the southern border of USA. One is governed by USA while the other one by Mexico. By using this example and providing us with examples to contrast how different these two cities, the authors claims that the quality of governance within a country decides whether it prospers or not.

Culture, religion, language or other factors do not matter. To illustrate this, they contrast North Korea with South Korea and attribute the latter’s economic development and much higher living standard to its strong, functional institutions (referred to as pluralistic, inclusive institutions, in contrast to extractive institutions that serve only the elite few).

Pluralistic institutions are built up over the years but countries need time to be able to do that. The authors cite examples of Middle East and why almost none of its countries have higher living standards (except for Israel, which is an exception). Middle East was under control of the Ottoman Empire that did not want industrialization to spread to its territories.

The unrest that countries go through (e.g. due to war or authoritarian regimes ) prevent the countries from building up their pluralistic institutions. Thus most countries in Africa are developing or under-developed.

• Most successful countries (mostly in Western world but also Singapore, Korea, Japan) are the ones that could take advantage of industrialization and thanks to their pluralistic institutions (that granted equal opportunities for participation in business and other opportunities to their citizens) those countries are the most prosperous today.

Dictators and the a the privileged class do not want pluralistic intuitions that bring equality into a society. They want and live through maintaining corrupt, bigoted institutions (judiciary, banking, etc.) so that they stay in power

Countries can go down or up the path to prosperity. It’s possible to make negative progress (example of Venice where once there was egalitarian participation for working class people in business opportunities but then this pluralistic economic scenario was reversed ).

In other words, true democracy (the rule of people, by people, for people — through intuitions that are fair, objective and centralized) is the pre-requisite for successful nations.