C o n t e n t s
Preface
Why Egyptians fi lled Tahrir Square to bring down Hosni Mubarak
and what it means for our understanding of the causes of
prosperity and poverty
1.
So Close and Yet So Different
Nogales, Arizona, and Nogales, Sonora, have the same people,
culture, and geography. Why is one rich and one poor?
2.
Theories That Don’t Work
Poor countries are poor not because of their geographies or
cultures,
or because their leaders do not know which policies will enrich
their citizens
3.
The Making of Prosperity and Poverty
How prosperity and poverty are determined by the incentives
created by institutions, and how politics determines what
institutions a nation has
4.
Small Differences and Critical Junctures:
The Weight of History
How institutions change through political confl ict and how
the past shapes the present
5.
“I’ve Seen the Future, and It Works”:
Growth Under Extractive Institutions
What Stalin, King Shyaam, the Neolithic Revolution, and the
Maya city-states all had in common and how this explains why
China’s current economic growth cannot last
6.
Drifting Apart
How institutions evolve over time, often slowly drifting apart
7.
The Turning Point
How a political revolution in 1688 changed institutions in
England and led to the Industrial Revolution
8.
Not on Our Turf: Barriers to Development
Why the politically powerful in many nations opposed the
Industrial Revolution
9.
Reversing Development
How European colonialism impoverished large parts of the world
10.
The Diffusion of Prosperity
How some parts of the world took different paths to prosperity
from that of Britain
11.
The Virtuous Circle
How institutions that encourage prosperity create positive
feedback
loops that prevent the efforts by elites to undermine them
12.
The Vicious Circle
How institutions that create poverty generate negative
feedback loops and endure
13.
Why Nations Fail Today
Institutions, institutions, institutions
14.
Breaking the Mold
How a few countries changed their economic trajectory by
changing their institutions
15.
Understanding Prosperity and Poverty
How the world could have been different and how understanding
this can explain why most attempts to combat poverty have
failed
Acknowledgments
Bibliographical Essay and Sources
References
Index
Daron Acemoglu is the Killian Professor of Economics at
MIT. In 2005 he received the John Bates Clark Medal awarded to
economists under forty judged to have made the most significant
contribution to economic thought and knowledge. He is also the
co-author of The Narrow Corridor: States, Societies, and the Fate
of Liberty.
James A. Robinson, a political scientist and an economist,
is the David Florence Professor of Government at Harvard
University. A world-renowned expert on Latin America and Africa, he
has worked in Botswana, Mauritius, Sierra Leone, and South
Africa. He is also the co-author of The Narrow Corridor:
States, Societies, and the Fate of Liberty.
"Should be required reading for politicians and anyone concerned
with economic development." —Jared Diamond, New York Review of
Books
"...bracing, garrulous, wildly ambitious and ultimately hopeful. It
may, in fact, be a bit of a masterpiece."—Washington Post
“For economics and political-science students, surely, but also for
the general reader who will appreciate how gracefully the authors
wear their erudition.”—Kirkus Reviews
“Provocative stuff; backed by lots of brain power.”—Library
Journal
“This is an intellectually rich book that develops an important
thesis with verve. It should be widely read.” —Financial Times
“A probing . . . look at the roots of political and economic
success . . . large and ambitious new book.” —The Daily
“Why Nations Fail is a splendid piece of scholarship and a showcase
of economic rigor.” —The Wall Street Journal
"Ranging from imperial Rome to modern Botswana, this book will
change the way people think about the wealth and poverty of
nations...as ambitious as Jared Diamond's Guns, Germs, and
Steel."
—Bloomberg BusinessWeek
“The main strength of this book is beyond the power of summary: it
is packed, from beginning to end, with historical vignettes that
are both erudite and fascinating. As Jared Diamond says on the
cover: 'It will make you a spellbinder at parties.' But it will
also make you think.” —The Observer (UK)
"A brilliant book.” —Bloomberg (Jonathan Alter)
“Why Nations Fail is a wildly ambitious work that hopscotches
through history and around the world to answer the very big
question of why some countries get rich and others don’t.” —The New
York Times (Chrystia Freeland)
"Why Nations Failis a truly awesome book. Acemoglu and Robinson
tackle one of the most important problems in the social sciences—a
question that has bedeviled leading thinkers for centuries—and
offer an answer that is brilliant in its simplicity and power. A
wonderfully readable mix of history, political science, and
economics, this book will change the way we think about economic
development. Why Nations Fail is a must-read book." —Steven Levitt,
coauthor of Freakonomics
"You will have three reasons to love this book. It’s about national
income differences within the modern world, perhaps the biggest
problem facing the world today. It’s peppered with fascinating
stories that will make you a spellbinder at cocktail parties—such
as why Botswana is prospering and Sierra Leone isn’t. And it’s a
great read. Like me, you may succumb to reading it in one go, and
then you may come back to it again and again." —Jared Diamond,
Pulitzer Prize–winning author of the bestsellers Guns, Germs, and
Steel and Collapse
"A compelling and highly readable book. And [the] conclusion is a
cheering one: the authoritarian ‘extractive’ institutions like the
ones that drive growth in China today are bound to run out of
steam. Without the inclusive institutions that first evolved in the
West, sustainable growth is impossible, because only a truly free
society can foster genuine innovation and the creative destruction
that is its corollary." —Niall Ferguson, author of The Ascent of
Money
"Some time ago a little-known Scottish philosopher wrote a book on
what makes nations succeed and what makes them fail. The Wealth of
Nations is still being read today. With the same perspicacity and
with the same broad historical perspective, Daron Acemoglu and
James Robinson have retackled this same question for our own times.
Two centuries from now our great-great- . . . -great grandchildren
will be, similarly, reading Why Nations Fail." —George Akerlof,
Nobel laureate in economics, 2001
"Why Nations Fail is so good in so many ways that I despair of
listing them all. It explains huge swathes of human history. It is
equally at home in Asia, Africa and the Americas. It is fair to
left and right and every flavor in between. It doesn’t pull punches
but doesn’t insult just to gain attention. It illuminates the past
as it gives us a new way to think about the present. It is that
rare book in economics that convinces the reader that the authors
want the best for ordinary people. It will provide scholars with
years of argument and ordinary readers with years of
did-you-know-that dinner conversation. It has some jokes, which are
always welcome. It is an excellent book and should be purchased
forthwith, so to encourage the authors to keep working." —Charles
C. Mann, author of 1491 and 1493
“Imagine sitting around a table listening to Jared Diamond, Joseph
Schumpeter, and James Madison reflect on over two thousand years of
political and economic history. Imagine that they weave their
ideas into a coherent theoretical framework based on limiting
extraction, promoting creative destruction, and creating strong
political institutions that share power and you begin to see the
contribution of this brilliant and engagingly written book.” —Scott
E. Page, University of Michigan and Santa Fre Institute
“This fascinating and readable book centers on the complex joint
evolution of political and economic institutions, in good
directions and bad. It strikes a delicate balance between the logic
of political and economic behavior and the shifts in direction
created by contingent historical events, large and small at
‘critical junctures.' Acemoglu and Robinson provide an enormous
range of historical examples to show how such shifts can tilt
toward favorable institutions, progressive innovation and economic
success or toward repressive institutions and eventual decay or
stagnation. Somehow they can generate both excitement and
reflection.” —Robert Solow, Nobel Laureate in Economics, 1987
“It’s the politics, stupid! That is Acemoglu and Robinson’s
simple yet compelling explanation for why so many countries fail to
develop. From the absolutism of the Stuarts to the antebellum
South, from Sierra Leone to Colombia, this magisterial work shows
how powerful elites rig the rules to benefit themselves at the
expense of the many. Charting a careful course between the
pessimists and optimists, the authors demonstrate history and
geography need not be destiny. But they also document how
sensible economic ideas and policies often achieve little in the
absence of fundamental political change.”—Dani Rodrik, Kennedy
School of Government, Harvard University
“Two of the world’s best and most erudite economists turn to the
hardest issue of all: why are some nations poor and others
rich? Written with a deep knowledge of economics and political
history, this is perhaps the most powerful statement made to date
that ‘institutions matter.’ A provocative, instructive, yet
thoroughly enthralling book.” —Joel Mokyr, Robert H. Strotz
Professor of Arts and Sciences and Professor of Economics and
History, Northwestern University
“A brilliant and uplifting book—yet also a deeply disturbing
wake-up call. Acemoglu and Robinson lay out a convincing
theory of almost everything to do with economic
development. Countries rise when they put in place the right
pro-growth political institutions and they fail—often
spectacularly—when those institutions ossify or fail to
adapt. Powerful people always and everywhere seek to grab
complete control over government, undermining broader social
progress for their own greed. Keep those people in check with
effective democracy or watch your nation fail.” —Simon Johnson,
co-author of 13 Bankers and professor at MIT Sloan
“This important and insightful book, packed with historical
examples, makes the case that inclusive political institutions in
support of inclusive economic institutions is key to sustained
prosperity. The book reviews how some good regimes got launched and
then had a virtuous spiral, while bad regimes remain in a vicious
spiral. This is important analysis not to be missed.” —Peter
Diamond, Nobel Laureate in Economics
“Acemoglu and Robinson have made an important contribution to the
debate as to why similar-looking nations differ so greatly in their
economic and political development. Through a broad multiplicity of
historical examples, they show how institutional developments,
sometimes based on very accidental circumstances, have had enormous
consequences. The openness of a society, its willingness to permit
creative destruction, and the rule of appear to be decisive
for economic development.” —Kenneth Arrow, Professor Emeritus,
Stanford University, Nobel Laureate in Economics, 1972
“Acemoglu and Robinson—two of the world's leading experts on
development—reveal why it is not geography, disease, or culture
which explains why some nations are rich and some poor, but rather
a matter of institutions and politics. This highly accessible book
provides welcome insight to specialists and general readers alike.”
—Francis Fukuyama, author of The End of History and the Last Man
and The Origins of Political Order
“Some time ago a little known Scottish philosopher wrote a book on
what makes nations succeed and what makes them fail. The
Wealth of Nations is still being read today. With the same
perspicacity and with the same broad historical perspective, Daron
Acemoglu and James Robinson have re-tackled this same question for
our own times. Two centuries from now our great-great-…-great
grandchildren will be, similarly, reading Why Nations Fail.”
—George Akerlof, Nobel Laureate in Economics, 2001
“In this stunningly wide ranging book Acemoglu and Robinson ask a
simple but vital question, why do some nations become rich and
others remain poor? Their answer is also simple—because some
polities develop more inclusive political institutions. What
is remarkable about the book is the crispness and clarity of the
writing, the elegance of the argument, and the remarkable richness
of historical detail. This book is a must read at a moment
where governments right across the western world must come up with
the political will to deal with a debt crisis of unusual
proportions.” —Steve Pincus, Bradford Durfee Professor of History
and International and Area Studies, Yale University
“The authors convincingly show that countries escape poverty only
when they have appropriate economic institutions, especially
private property and competition. More originally, they argue
countries are more likely to develop the right institutions when
they have an open pluralistic political system with competition for
political office, a widespread electorate, and openness to new
political leaders. This intimate connection between political and
economic institutions is the heart of their major contribution, and
has resulted in a study of great vitality on one of the crucial
questions in economics and political economy.” — Gary S. Becker,
Nobel Laureate in Economics, 1992
“This not only a fascinating and interesting book: it is a really
important one. The highly original research that Professors
Acemoglu and Robinson have done, and continue to do, on how
economic forces, politics and policy choices evolve together and
constrain each other, and how institutions affect that evolution,
is essential to understanding the successes and failures of
societies and nations. And here, in this book, these insights
come in a highly accessible, indeed riveting form. Those who
pick this book up and start reading will have trouble putting it
down.” ¯Michael Spence, Nobel Laureate in Economics, 2001
"In this delightfully readable romp through 400 years of
history, two of the giants of contemporary social science bring us
an inspiring and important message: it is freedom that makes the
world rich. Let tyrants everywhere tremble!" —Ian Morris, Stanford
University, author of Why the West Rules – For Now
“Acemoglu and Robinson pose the fundamental question concerning the
development of the bottom billion. Their answers are profound,
lucid, and convincing.” ―Paul Collier, Professor of Economics,
Oxford University, and author of The Bottom Billion
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