thesis of why nations fail

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Why Nations Fail: A Summary

Failed nation states have a history of ‘extractive institutions’, successful ones have developed more inclusive institutions.

Table of Contents

Last Updated on June 23, 2023 by Karl Thompson

TLDR: Nations fail because of their inability to develop ‘inclusive economic institutions’.

This post is a summary of Why Nations Fail: The Origins of Power, Prosperity and Poverty (2013) by D. Acemoglu and J.A. Robinson.

Overall Summary…

Developed countries are wealthy because of ‘inclusive economic institutions’ – Basically a combination of the state and the free market in which:

• The state creates incentives for people to invest and innovate through guaranteeing private property rights and enforcing contract law.
• The state enables investment and growth through providing education and infrastructure..
• The state is controlled by its citizens, rather than monopolised by a small elite. Crucially, there needs to be a democratic principle at work in which people in politics establish institutions and laws which work for the majority of people, rather than just working to benefit the rich.
• The state also needs to maintain a monopoly on violence.

In contrast to those countries which develop ‘inclusive economic institutions’ which encourage development, the authors suggest the opposite ‘extractive economic institutions’ (think corrupt dictator and his clique stashing money into a Swiss bank account) can generate growth in the short-term, but in the long term result in poverty.

They also suggest that there has been ‘a vicious circle’ at work in many underdeveloped countries over the last three to four centuries: Extractive institutions were first established by a colonial power (typically built on already existing internal extractive institutions), which, on independence, became even more extractive under postcolonial rulers, which in turn lead to civil war as competing factions fought for control over the extractive institutions – which then led to a decent into chaos and failed states. The authors see little hope for such countries.

In contrast, developing countries such as the US and the UK have benefited from three to four centuries of a virtuous circle in which institutions have become gradually more inclusive, which has created increasing incentives for entrepreneurs and economic growth.

The authors come to this conclusion through a number of comparative studies of countries which are in close geographical proximity to each other such as

• Mexico/ America
• South/ North Korea
• Botswana/ Zimbabwe

They argue that the crucial difference between these pairs of countries is the institutional infrastructures which have been established through the last few decades/ centuries, and it is this that explains their relative development/ underdevelopment.

The gist of the book is, handily enough, covered in the intro and chapter one….

Why Nations Fail: Introduction

Countries such as Egypt are poor because they have been ruled by a narrow elite that have organised society for their own benefit at the expense of the vast mass of people. (This also applies to North Korea, Sierra Leone, Zimbabwe)

Countries such as Great Britain and The United States are wealthy because their citizens overthrew the elites who controlled power and created a society where political rights were much more broadly distributed, where the government was accountable and responsive to its citizens and where the great mass of people could take advantage of economic opportunities. (This also applies to Japan and Botswana).

Chapter one – so close and yet so different

Starts with a comparison of the two sides of Nogales, half of which lies in Arizona, in the US, the other half in Mexico.

In the Arizonan half the average income is $30 000 U.S dollars, the majority of adults are high school graduates, the roads are paved, there is law and order, most live until over 65. In the Southern half, the average income is three times less and everything else is similarly worse.

The authors point out that the difference cannot be because of environment or culture, it must be because of politics and economic opportunities.

They also argue that in order to understand the difference, you need to go right back to early Colonialism in the 16th and 17th centuries.

Mexico was the first to be colonised, under a system of slavery and extraction. In the 15th century, the Spanish basically used already existing systems of slavery to their own benefit and extracted mountains of gold and silver, leaving a legacy of elite-governance and a dearth of political rights for the majority.

In North America, settled by mainly the English 100 years later, the absence of slavery among indigenous populations and much lower population densities meant that slave systems simply would not work, although this didn’t stop them trying for the first twenty years or so. Eventually, however, the original settler company (The Virginia company) back in England realized the only way colonialism was going to work was to provide incentives for the settlers – So they offered them land in return for work. It was this that set the basis for the democratic constitution and congress of the US, which then went on to create problems for the English government.

The rest of chapter goes on to argue that the next 300 years of history are crucial to understanding why the US is now so wealthy, and why most of Latin America is so poor.

America has had 300 years of political stability, where political institutions control economic institutions, at least to an extent (the authors cite the breaking up of the Microsoft Monopoly as an example) broadly making them work for everyone. Other factors such as the patent system, credit systems, and education provide opportunities for anyone to make it rich and enjoy the benefits of the wealth.

By contrast in Latin America (Mexico), up until the 1990s most countries saw political turmoil and a series of dictatorships where a series of small elites ruled for their own benefit. This instability has lead to the rise of monopoly power, and it acts as a disincentive for anyone to try and do well and become rich (the next dictator might just take all your money away), also lack of finance and education prevents competition anyway.

Crucially, historical good fortune appears to be central to explaining why a country is rich now, so figuring out how a current poor country can develop is not that straight forward if a culture of monopoly, corruption and lack of political rights are the norm…..

Chapter three – the making of prosperity and poverty

This chapter contrasts North and South Korea, divided along the 38th parallel after world war two. In the late 1940s these had similar levels of development, today, however, their economies have diverged.

South Korea has living standards 10 times higher than North Korea, the former being similar to Portugal, the later similar to sub-Saharan African countries. People in North Korea also live ten years less than those in South Korea.

The differences cannot be explained by anything other than institutions.

In the South, private property and markets were encouraged (albeit by dictators initially) and thus investment and economic growth were encouraged. At the same time, the government invested in education and new industries took advantage of a better educated population.

In North Korea, private property and markets were banned, and a centrally planned economy instigated. This simply led to stagnation.

Extractive and Inclusive economic institutions

Countries differ in their economic success becasue of their different institutions – the rules influencing how the economy works and the incentives that motivate people. Crucial is private property rights – which needs to be backed by the state…. In South Korea, people know that they will be rewarded for their efforts, in North Korea, there is no incentive to innovate and invest because the state will expropriate the benefits of any such initiatives.

In order to develop a society needs to have ‘inclusive economic institutions’ – A state that guarantees prosperity for the massess – Such a state provides a degree of infrastructure that is necessary for economic growth – for example enforcing private property rights, contract rights for all, not just a minority, and providing education and physical infrastructure such as roads. Private enterprise uses and needs such institutions.

What doesn’t work for development is extractive institutions – where the state is used to extract wealth from one subset of the population to another…. Such as slave and colonial systems (and the Tories in the UK today?)

Engines of Prospertity

Education for the masses is crucial for innovation in an advanced technological world – This is what all developed nations have, and what many undeveloped nations lack. Education needs to be well financed and parents need to have the incentive to send their kids to school.

Inclusive and extractive political institutions

A state needs to be inclusive for economic growth to occur – that is, it needs to both be chosen by its citizens and have a centralized control over legitimate violence.

Extractive political and economic institutions tend to support each other (which then means the masses don’t support them…. there is disincentive!)

Why not always choose prosperity?

The simple fact is that where technological change is the engine of economic growth, this means social change, and with change there are winners and losers… Thus existing elites may resist changes that make institutions more inclusive even if this means greater prosperity for all, because it will mean less prosperity for them. (Think industrial revolutions in Europe).

The long agony of the Congo

The Congo has not developed since independence because it has not been in the interests of the ruling elite to build a centralised state which includes all voices, or in their interests to use the state to provide public services which will benefit the masses – instead the institutions remain extractive.

As an independent polity, Congo experienced almost unbroken economic decline and poverty under the rule of Jospeh Mobutu between 1965 and 1997. Mobutu created a set of highly extractive economic institutions. The citizens were impoverished but Mobutu and the elite around him (known as the Grosses Legumes or The Big Vegetables) became fabulously wealthy. Mobutu built himself a palace at his birthplace, Gbadolite, with an airport large enough to land a supersonic Concord jet, a plane he frequently rented from Air France for travel to Europe. In Europe he bought castles and owned large tracts of the Belgian capital Brussels.

The simple truth is that if Mobutu had introduced more inclusive economic institutions he would not have been as rich.

Growth under extractive institutions

Growth can occur under extractive instiuttions – as in Russia and South Korea at first and China today but this is unlikely to be sustained unless both economic and political insitutions become inclusive.

Chapter twelve – the vicious circle

The authors paint the vicious circle as starting off with extractive institutions established by a colonial power (which builds on previous extractive institutions), which, on leaving, becomes even more extractive under corrupt post-colonial rulers, which in turn leads to civil war as competing factions fight for control over the extractive institutions – which then leads to a decent into chaos!

Or in more detail… The British Colonial Authorities built extractive institutions which many post independence African politicians were only too happy to continue in order to enrich themselves. This happened in countries such as Sierra Leone, Ghana, Kenya and Zambia. The postcolonial rulers used their wealth to build personalized security forces which were answerable to them and also to rig elections – money thus became essential to maintain power, with only those who have money able to maintain power. This creates incentives among the opposition to depose the existing leaders in order to gain power and wealth themselves, and to protect themselves from being killed off by the said existing leaders. The point here is that power has become an end in itself rather than as a means to developing a country.

This is best illustrated through the example of Sierra Leone –

All of the West African nation of Sierra Leone became a British colony in 1896. The British identified important rulers and and gave them a new title – paramount chief. In Eastern Sierra Leone, for example, they encountered Suluku, a powerful warrior king, who was made Paramount Chief Suluku.

In 1898 the British tried levying a hut tax of five shillings, which resulted in a civil war known as the hut tax rebellion. It started in the north, but was strongest and lasted longest in the South.

In 1904, the British stopped construction of a railway line from Freetown to the North East and instead diverted it south, to Bo, in Mendeland, to give them quick access to put down this rebellion.

When Sierra Leone became independent in 1961 the British handed power to to the SLPP, which attracted support from the South, and in 1967 this party lost the election to the opposition party, the APC which drew support from the North.

Though the railway line was initially established to rule SL, by 1967, its role was economic – it allowed transportation of the country’s exports – coffee, cocoa, and diamonds, which came mostly from Mendeland in the south.

The then leader of the APC, Siaka Stevens, who drew his political support from the north, ripped up the railway line and sold off the track and rolling stock in order to weaken the opposition in the south and consolidate his political power. This decimated the SL economy, but when it came to a choice between consolidating power and economic growth, the consolidation of power won out. Today, you can’t take the train to Bo anymore.

There is continuity between Colonial rule and Steven’s government – both extracted wealth from the people.

The Colonial rulers did this through agricultural marketing boards – farmers had to sell their goods to these boards, which typically paid much less than the market price (impoverishing farmers and enriching the elite). When Stevens took power, he kept these marketing boards in place, but it got worse – under colonial rule, the colonialists extracted about 50% of the value of agricultural products, under Stevens, the rate of extracting rose to 90%.

Along with marketing boards, the old system of Paramount Chiefs remain in place today…. They control local politics at the village level, and local land rights and taxation – Paramount chiefs are elected, but only members of the ruling house can stand – and in 2005 the victor was Sheku Fasuluka, King Suluku’s great, great grandson.

The combination of these two institutions means there is very little incentive for farmers to increase productivity – because they have insecure land rights due to the paramount chief system and are the victim of extractive institutions in the form of the marketing boards.

Thirdly, there was the control of the diamond mines – The British essentially set up a monopoly for the entire country and handed it to DeBeers in 1936, and shortly after independence, Stevens simply nationalized this arrangement, through which he effectively personally controlled 51% of the diamonds in SL.

Stevens used his vast fortune to buy political influence and to set up his own private security forces – the ISU (known locally as the ‘I Shoot You’ and the Special Security Division – known as Siaka Steven’s Dogs).

All of this set the scene for the brutal civil war, outlined below….

Chapter 13 – Why Nations Fail Today

In the year 2000 Zimbabwe held a national lottery for everyone who had kept more than 5000 Zimbabwean dollars in their bank account (following a period of hyperinflation). The fact that it was Robert Mugabe who won this lottery just goes to show the extent of his control over Zimbabwe’s institutions and just how extractive those institutions had become.

The most common reasons nations fail today is because they have extractive institutions – and Zimbabwe illustrates the economic and social consequences of these…. By 2008 its per capita income was half that when it gained its independence, and 2009 the unemployment rate stood at 94%.

The roots of the political and economic institutions lie in the colonial period. Originally apartheid institutions were established for a white elite to extract wealth from the country, but when Zimbabwe gained its independence, these institutions were simply maintained by Mugabe. Eventually (because of lack of inclusivity) his support waned until by the year 2000 he had to find further resources to buy political support – so he expropriated the farms owned by white people and when that wasn’t enough he printed money, which led to massive hyperinflation.

Nations fail today because their extractive institutions do not create the incentives to save, invest and innovate. In many cases politicians stifle economic activity because this threatens their power base (the economic elite) – as in Argentina, Colombia and Egypt. In the cases of Zimbabwe and Sierra Leone this led to total state failure and economic stagnation. The countries in which this has happened include…

• Sierra Leone

And the civil war, mass displacement, famines and epidemics that accompany them… in terms of development many of these countries are poorer today than they were in the 1960s.

A children’s crusade…

This section outlines the causes of the civil war in Sierra Leone. The authors put this down to decades of extractive institutions by the tyrannical APC government (the economy was collapsing by 1985, and they use the example of the TV transmitter being sold by the minister of information in 1987 and in 1989 the country’s main radio antenna collapsed, ceasing radio transmissions.) By this point, the army had been disbanded because of the ruling elite feared it might overthrow them, which meant by the time Charles Taylor’s RPF crossed the boarder in 1991 there was no one there to stop them…. And then that brutal and chaotic civil war carried on for a decade – in which competing factions competed over resources in order to keep fighting each other – diamonds/ children (soldiers) and weapons.

So in summary, the historical precedent of the SL civil war is extractive institutions… the hollowing out the state to the point that was incapable of fending off rebels.

The authors now go on to outline three other countries which have suffered from different types of extractive institutions – Colombia, Argentina and Egypt, and then Uzbekistan…. a country languishing under the absolutism of a single family and the cronies surrounding them, with an economy based on the forced labour of children….

Cotton accounts for 45% of the exports of Uzbekistan. When the country was created in 1991, its first and still only president Islam Karimov, divided up the land among farmers, but each was required to devote at least 35% of their land to cotton, a valuable export crop. However, because the farmers themselves receive only a fraction of the world market price of the crop, they had no incentive to maintain, let alone invest in, cotton harvesting machinery.

No matter, however, because the country has turned to children to harvest the cotton, and every September-November the schools are emptied of approx. 2.7 million schoolchildren. Teachers, instead of being instructors, become labour recruiters.

Each child is required to pick between 20-60KG a day, depending on age, and the lucky ones who live close to their allocated farms can walk or bus to work, but the unlucky ones have to sleep over in sheds, with no toilets or wash facilities. And it’s BYO food.

While the market price for cotton was $1.40 in 2006, the children were paid somewhere in the region of $0.01 per kilo.

All of this has come to pass because Karimov has established a regime where opposition is repressed and there is no free media or NGOs allowed.

Why do nations fail?

What all of the countries looked at in the book have in common is that they have an elite who have designed economic institutions in order to enrich themselves and perpetuate their power at the expense of the vast majority of people in society.

Despite differences the bigger picture is that in each of these countries extractive political institutions that have created extractive economic institutions which transfer wealth and power toward the elite.

The solution is to transform the extractive institutions into inclusive ones…

Chapter fourteen – breaking the mold

This chapter looks at three case studies – Botswana, The South of America, and China, which all managed to move from, or negotiate their way around (in the case of Botswana) extractive to inclusive political institutions which encouraged economic development.

Of particular interest to me is the case of Botswana – which today has the same level of development as some Eastern European countries, despite being as poor as most of the rest of Sub-Saharan Africa in the 1960s (at which time there were less than 100 graduates in the entire country).

What’s especially interesting about Botswana is that in that particular region of Africa a broadly inclusive political system was in existence pre-colonialism – in the sense that any individual could rise up to become head of one the various different chiefdoms in the region, and so chiefdom was not hereditary, it was meritocratic, and someone could only be chief with the will of the people. Thus the principal of ruling with the will of the people, and on behalf of the people had been established for generations.

Another factor which promoted development was the fact that the English weren’t particularly interested in Botswana. In fact in the 1890s, three Twsana chiefs visited England and negotiated with the government to be part of a British Protectorate (different to a colony) – In return for protecting the region against Rhode’s South African expansionary policies (the guy who colonised Zimbabwe and Zambia, and look how they turned out!) all England wanted was enough land to build a railway in order to open up the interior. For this the Twsana were pretty much left alone, crucially unextracted and without interfering institutions which had been set up to allow the extraction to take place.

Also significant is that, following Colonialism and the discovery of diamonds, the Tswana chiefs passed a law that all diamond wealth was to be national property, rather than giving the rights to individuals or Corporations (like neoliberals would claim should be done, and like what happened in Sierra Leone). The effect of this was masses of public money which was then used to pay for public services. Hence development……

Something else emphasized in this chapter is that in all three cases certain key actors made important decisions at crucial junctures in the country’s history (when an existing leader died, such as Mao, creating a power vacuum, or when Independence was gained in Botswana) – The decisions taken at these crucial points in history in these countries involved either fighting the power of entrenched elites (as in China) or establishing laws which would prevent political corruption (like nationalising the diamond supplies in Botswana) – it was these decisions, in contrast to decisions in countries like Sierra Leone where a national rail line was sold off to benefit an elite, which led to economic development.

Chapter 15 – understanding prosperity and poverty

The most interesting section of this concerns the predictive power of the theory – which is limited given the role of agency and contingency in said theory. However, the authors do predict that…

America and Europe are likely to get even richer than countries in most of the rest of the world, because these are the most inclusive institutions (I’d beg to differ given Tory Policy). Nations that have undergone no significant state centralisation such as Afghanistan, Somalia and Haiti are unlikely to witness any development. Some Latin American countries are set two grow – most notably Brazil, Chile Mexico as are some African countries – Tanzania and Ethiopia for example. Growth will not be sustained in China.

The irresistible charm of authoritarian growth…..

This section reminds us that modernisation theory is flawed – economic growth (more Mcdonalds as Thomas Friedman might put it) does not necessarily lead to to more inclusive political institutions.

Plenty of repressive regimes have pursued and achieve very rapid economic growth in the last 60 years – Germany, for example, Russia, and China.

This chapter also deals with what probably won’t work in terms of development… Firstly, any attempt at engineering policy changes such as those attempted by neoliberalisation throughout the 1980s and 90s – Because if a country is politically corrupt, they just subvert the policy changes – Privatisation happens, but the people winning the contracts are the brothers of the ministers for example, or the country says it implements a policy but they just carries on as normal!

You can’t engineer prosperity

…because the actors within developing countries are constrained by their institutions, and if these are extractive then any programmes designed to engineer change will ultimately result in further extraction.

This is true of two approaches to foreign aid preferred by the West – both the neoliberal ‘restructure your economy’ type approach and the micro-economic approach which focuses on specific institutions.

The failure of foreign aid

As above, any aid money going into a country with extractive institutions will ultimately end up being extracted. The authors do argue, however, that even if only 20% of aid money reaches its ultimate destination then it’s worth it!

What works….?

The chapter and book round off by going back to the English and US revolutions which resulted in institutions becoming more inclusive – what is required for development is a plurality of voices demanding to be heard by government and actually being heard. This cannot be imposed from above, but seems to have to become from below.

In this sense, any attempt to engineer growth and provide aid seem pointless – the only things that make any sense are programmes oriented towards empowerment and making sure media is free because the later fosters the former.

Thoughts and comments….

The comparative analysis of countries and territories in close geographical proximity does seem to rule out the role of environmental and cultural factors in explaining divergent patterns of development, leaving only political and economic institutions.

It fully recognizes the importance of the legacy of extraction identified by dependency theory , however, it also puts more emphasis on the already existing extractive institutions which the early colonizers extracted and it recognizes the continuation of extraction post-colonialism, acknowledging the fact that corrupt elites also play a role.

This seems to deny the validity of neoliberal theory – the state seems to be crucial in helping development, and the absence of the state seems to be crucial in explaining the descent into chaos and civil war.

This isn’t a deterministic theory – it stresses the importance of agency and contingency at crucial historical junctures.

Limitations

This is  quite a generalist analysis – ‘extractive’ and ‘inclusive’ institutions are very general, broad terms, and there’s lots of variation possible within these voluminous concepts.

The book only draws on a relatively few case studies – and lacks the statistical rigor of, for example,  Paul Collier’s Bottom Billion Theory .

The book doesn’t seem to deal with the globalised context of the nation state today within a ‘world system’ – There is no mention (as far as I can see) of the role which TNCs, trade rules, the World Bank might play in allowing a global elite (rather than nationalised elites) to extract regions of the world.

As a final word , what’s maybe most timely (or not timely?) about the book is its suggestion that some kind of political infrastructure which allows a plurality of voices to be heard and wealth to be distributed so it benefits all is crucial to development – it’s time more of us started asking how we might do this at a global, rather than a national level.

Signposting and Further Reading

This post should be relevant to students studying the Global Development module as part of A-level sociology.

Further Reading

The blog based around the book

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19 thoughts on “Why Nations Fail: A Summary”

great summary

In an article in the Foreign Policy the authors gave a gist of their findings in the form of a set of following ten reasons why certain countries fail or fall apart blaming the deeply flawed political institutions and equally flawed “extractive” economic institutions, both captured by a predatory elite; 1.Lack of Property Rights which serves as a disincentive for wealth accumulation and hard work in North Korea. 2.Forced Labour, particularly of students used for cotton plantations in Uzbekistan 3.Tilted Playing Grounds of South Africa whereby black population gets preferential treatment in the job market and state bounties 4.Big Men Get Greedy like they did in Egypt where they virtually controlled all the sources of wealth creation 5.Elites Block New Technology, a very telling example of Austria of 1850s which refused laying of railway lines fearing that it would create conditions like French Revolution. On the other hand UK introduced railways at the same time not only at home but also in her colonies and reaped the benefits 6.Law and Order, absence of which as witnessed in Somalia results in civil war and deterioration in living standards 7.Weak Central Government which is unable to control non state actors who create difficulties in provision of civic amenities and promulgation of property legislation-case of Columbia 8.Bad Public Services witnessed in the Peruvian provinces 9.Political Exploitation by the Iron law of oligarchy which is in operation in Bolivia 10.Fighting over Spoils-Sierra Leone, constant struggle for power for getting the spoils

Interestingly while the authors have given examples of ten cities to illustrate their theory of state failure due to the interplay of extractive institutions and predatory elites, they stress for an effective centralized state to have a prosperous economy which is dependent upon law and order, an effective legal framework, a fair disputes resolution mechanism and provision of basic public goods.

Hey thanks, I agree, extraction tends not to work for everyone!

you have done such a great job. in reality its happening in all over the world. We can say that extractive institutions are the sins of society.

So wonderful summary, teach me a lot about the book, thank you so much.

Hey thank you for your kind words. I’m glad you found the post useful!

This is an excellent summarizing of the whole book. At least it give a sense why nations choose the road of prosperity and impoverishment. Thanks to the authors giving me insights.

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Yeah, it seems so, I had to stop reading halfway through so I didn’t get too many spoilers haha.

It’s well worth a read – nice country case studies throughout to illustrate ideas.

Great post, I really must read this book!

It’s just a matter of too few hours in the day!

why isnt there a summary of chapter 10

an apt piece of writing to understand the role of economy and prosperity behind national prosperity

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Excellent summarizing. This gave us the good knowledge about the book.

Thanks very much for the comment, very useful examples to illustrate and certainly something to think about!

I found this one a little by accident, but I think I can clear out one question you raise:

Why aren’t TNC given much weight? Well, TNC’s are expected to follow the rules, and in cases when they don’t it doesn’t last very long before local authorities force them to compliance. Given that local authorities has the competence to do so. And that’s the reason why A&R don’t write so much about them. Their behaviour and effect on a society is pretty much in line with the institutions already there.

No TNC could interfere when Norway decided to more or less nationalise petroleum. But, obviously, Norway had inclusive institutions and a competent bureaucracy, so there weren’t much space for foul play.

In Nigeria, on the other hand, there are no inclusive institutions, and any kind of rules can be ignored if it suits the ruler. And TNC’s, with large resources are having a party, taking advantage of the situation.

So A&R will argue that institutions predicts TNC behaviour, rather than the other way around, hence it is sufficient to focus on the first. Something like that.

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In an article about how to rebuild failed states, The Economist highlights Prof. Daron Acemoglu’s book “Why Nations Fail.” Acemoglu and his co-author Prof. James Robinson of the University of Chicago argue that political institutions largely determine a nation’s success, and that failed states provide “a general explanation for why poor countries are poor.”

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Why Nations Fail: The Origins of Power, Prosperity, and Poverty

Is it culture, the weather, geography? Perhaps ignorance of what the right policies are?

Simply, no. None of these factors is either definitive or destiny. Otherwise, how to explain why Botswana has become one of the fastest growing countries in the world, while other African nations, such as Zimbabwe, the Congo, and Sierra Leone, are mired in poverty and violence?

Daron Acemoglu and James Robinson conclusively show that it is man-made political and economic institutions that underlie economic success (or lack of it). Korea, to take just one of their fascinating examples, is a remarkably homogeneous nation, yet the people of North Korea are among the poorest on earth while their brothers and sisters in South Korea are among the richest. The south forged a society that created incentives, rewarded innovation, and allowed everyone to participate in economic opportunities. The economic success thus spurred was sustained because the government became accountable and responsive to citizens and the great mass of people. Sadly, the people of the north have endured decades of famine, political repression, and very different economic institutions—with no end in sight. The differences between the Koreas is due to the politics that created these completely different institutional trajectories.

Based on fifteen years of original research Acemoglu and Robinson marshall extraordinary historical evidence from the Roman Empire, the Mayan city-states, medieval Venice, the Soviet Union, Latin America, England, Europe, the United States, and Africa to build a new theory of political economy with great relevance for the big questions of today, including:

• China has built an authoritarian growth machine. Will it continue to grow at such high speed and overwhelm the West?
• Are America’s best days behind it? Are we moving from a virtuous circle in which efforts by elites to aggrandize power are resisted to a vicious one that enriches and empowers a small minority?
• What is the most effective way to help move billions of people from the rut of poverty to prosperity? More philanthropy from the wealthy nations of the West? Or learning the hard-won lessons of Acemoglu and Robinson’s breakthrough ideas on the interplay between inclusive political and economic institutions?

Why Nations Fail will change the way you look at—and understand—the world.

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Books for self-isolation: Revisiting Why Nations Fail

Looking to past examples of state collapse offers a predictive guide to why nations will fail in the future.

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Ed’s note: In response to a call on The Interpreter for reading suggestions in the event of a stint in Covid-19 related quarantine, Scott Robinson wrote that he’d recently revisited Why Nations Fail , by Daron Acemoglu and James A. Robinson. “I feel that we often forget the lessons of this seminal text, and so I have written a review of the book that captures the core messages, and what I think is missing,” Scott said. (The same authors also released a new book,  The Narrow Corridor , in 2019.)  

The cynical converse of this theory is that exclusive political institutions create what the authors label “extractive” economic institutions. Common forms are monopolies, slavery, serfdom, and feudalism. As wealth and power is concentrated, the ability of the holders of power to propagate and enforce these institutions increases. Elites, not accountable to the population, create and protect monopolies and resist any threats, such as creative destruction, to their supremacy. Policies that are inimical to the prosperity of the state are enacted. This enervates the population away from invention and investment, as the inevitable seizure of assets by the state make such pursuits abortive. Labelled the “vicious cycle”, the authors argue this as the principal reason why nations fail.

Acemoglu and Robinson employ a plethora of historical examples in support of their argument. These examples make up the bulk of pages. In citing the Western European example of why the industrial revolution occurred in England, they argue that the comparative weakness of the English crown, as compared to the Spanish and French crowns, led to the English crown having to cede powers to the parliament (through the English civil war and Glorious Revolution). Parliament, being a more inclusive institution than the alternative of absolutism of the divine right of kings, enacted policies that abolished monopolies, and granted and protected private property rights.

The mechanism through which this was assured, the authors argue, is that parliament was accountable to the people, and so people voted for a parliament that benefited the majority. The population then pursued invention and investments with surety, resulting in the industrial revolution.

The first reaction to this argument is to point out the flaws in the theory (lack of voting rights for women; only the wealthy, educated elite would vote or could get elected to parliament; susceptibility of people to rhetoric). However, these flaws are not fatal if cognisant of the alternative, the absolutism of the crown.

There are, however, two critiques of Why Nations Fail , and one seemingly unintended consequence that can be deduced from the book. The first is the oversight of the effect of trade interdependence. The second is the dismissal of geography.

Acemoglu and Robinson argue that culture, geography, or ignorance are not dominating factors in why nations fail. In concentrating on these three areas, they seem to preclude an obvious and overriding observation: that trade interdependence has a pivotal impact on how willing people are to centralise power to the state (a necessary precondition to inclusive political institutions), and critically affects the manner in which that power is exercised.

For example, if societal groups have an enduring and preeminent loyalty to only their immediate group, which may be limited for a multitude of reasons (geographic isolation, scarcity of resources), it is unlikely they will be willing or able collectively to centralise power alongside other isolated groups. Countries that consist of hundreds of such groups abound, especially in the Pacific. Unless and until interaction between these groups is frequent and mutually fruitful (trade interdependence), centralisation of political power is unlikely.

Accountability (the manner in which centralised power is exercised), is also affected by trade interdependence. If a particular isolated, self-sufficient group gains power over several isolated neighbouring groups, it is likely the powerful group will establish extractive institutions that benefit only themselves. As they do not interact frequently with or depend on the other groups, they are not accountable to them. The vicious cycle is guaranteed at the outset, given the lack of interdependence and lack of accountability.

The converse of this isolation is the concentration of several different groups that do not face such barriers to interaction, and that rely on trade with each other. Conjure a country rich in resources with several distinct groups that rely on trade with each other. Those on the coast would trade aquaculture products for resources produced by those inland, perhaps timber or stone. Given sufficient time, the economies of the separate groups would become intertwined, interdependent. It would be in the interest of any political authority to serve both their immediate group and those they trade with, as otherwise the valuable resources your group has come to rely on would be at risk. Inclusive institutions are far more likely to emerge under this scenario.

The second critique is authors’ dismissal of geography. As with the cultural example, intranational geographic isolation makes for a more suspicious peoples who are unwilling to centralise power. However, there is also the issue of geographic factors on the international scale. The prevalence of domesticable livestock, arable land, and plants that are able to be harvested make critical differences in the productivity of a people.

For example, the lack of horse, cattle, sheep, wheat, and barley in your country, no matter how altruistic and centralised your political systems are, will leave you at a disadvantage compared to a nation that has access to these resources. Higher productivity leads to more time dedicated to other pursuits (inventing, writing, thinking, creating permanent settlements). The importance of the absence of these resources is unduly discounted in the book.

Finally comes what can be deduced from the discussion, even if unintended. The authors have attempted to explain historically why nations have failed. In their thesis they rightly dismiss the factors of culture and ignorance, and discount the importance of trade interdependence and geography. The modern world, however, is far less constrained by these limitations – livestock and crops can be grown around the world, thanks to irrigation, people are able to travel to any number of nations, and global trade is indispensably intertwined. This largely removes these limitations.

So although Acemoglu and Robinson have attempted to explain the historical reasons nations have failed in the past, they have paradoxically provided both a predictive paper on why nations will fail in the future and a blueprint for prosperity for contemporary policy practitioners who are conversant with development theory.

In a sentence, it is those countries that establish inclusive political and economic institutions that will succeed.

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Why Nations Fail by Daron Acemoğlu and James Robinson – review

Two US academics offer a compelling analysis of the world’s financial malaise

A s the turbulence of global economic crisis starts to recede, the two fundamental features of the world economy in our times re-emerge. One is the gap between rich and poor countries. Two hundred years ago, there was no such gap, at least not on the scale we are used to today; nor, most probably, will there be one in 200 years’ time. But the present reality is of astounding difference: the same people can live in abject poverty in one country, yet be prosperous once they move to another.

This book takes the graphic example of the twin towns of Nogales, one on the Mexican side of the border, the other on the American side: why does a border make such a difference? Self-evidently, this question matters, because unacceptable global inequality generates other brute facts: the psychologies of guilt and resentment; escalating pressures for migration; and the nightmare choices that face the world when some nations do not merely fall behind, but fall apart.

Scholars have struggled for decades to find a convincing answer. Often, the direction of search has been technocratic. In the 1960s, the dominant explanation was that poor countries lacked capital; by the 1980s, it was that they had poor economic policies.

The last decade has appeared to offer a new and potent clue: the ascent of China , which is the other fundamental feature of our times. China’s growth is an economic phenomenon without precedent that has implications both for poverty and geopolitics. It has lifted millions out of penury and the country is projected soon to topple America from its position as the world’s largest economy. The beacon offered by China has been widely interpreted, especially by African elites, as demonstrating the benefits of autocracy.

For anyone remotely interested in these issues Why Nations Fail is a must-read. Acemoğlu and Robinson are intellectual heavyweights of the first rank, the one a professor of economics at MIT, the other a professor of political science at Harvard. Mostly, such people write only for other academics. In this book, they have done you the courtesy of writing a book that while at the intellectual cutting edge is not just readable but engrossing. This alone would be reason to take notice: a vital topic, top scholars, and a well-written book.

But this is not the half of it. The reason that Why Nations Fail is not to be missed is that their thesis pulls apart the two big brute facts of global development. Far from seeing China as the clue to spreading prosperity, Acemoğlu and Robinson see it as yet another instance of a society rushing into a cul-de-sac. China is not, on their analysis, on course for our own level of prosperity.

Their argument is that the modern level of prosperity rests upon political foundations. Proximately, prosperity is generated by investment and innovation, but these are acts of faith: investors and innovators must have credible reasons to think that, if successful, they will not be plundered by the powerful.

For the polity to provide such reassurance, two conditions have to hold: power has to be centralised and the institutions of power have to be inclusive. Without centralised power, there is disorder, which is anathema to investment.

China most certainly ticks this box – it has centralised power and order in spades. Some African societies don’t; localised power usurps the authority of the state. But China resoundingly fails to tick the box of inclusive institutions. Acemoğlu and Robinson quote a summary of the structure of Chinese political power: “The party controls the armed forces; the party controls cadres; and the party controls the news.”

That states need order to prosper is important but no longer controversial. That they need inclusive institutions is, in view of China’s success, wildly controversial. Their argument is that order without inclusive institutions may enable an economy to escape poverty, but will not permit the full ascent to modern prosperity. Their explanation is that if the institutions of power enable the elite to serve its own interest – a structure they term “extractive institutions” – the interests of the elite come to collide with, and prevail over, those of the mass of the population.

So, if inclusive institutions are necessary, how do they come about? Again, Acemoğlu and Robinson are radical. They argue that there is no natural process whereby rising prosperity in an autocracy evolves into inclusion. Rather, it is only in the interest of the elite to cede power to inclusive institutions if confronted by something even worse, namely the prospect of revolution. The foundations of prosperity are political struggle against privilege.

A thesis can be summarised, albeit crudely, in a short review. Yet 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.

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Why Nations Fail: The Origins of Power, Prosperity, and Poverty Paperback – September 17, 2013

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About the author

James a. robinson.

James A. Robinson, a political scientist and an economist, is one of 8 current University Professors at University of Chicago. Focused on Latin America and Africa, he is currently conducting research in Bolivia, the Democratic Republic of the Congo, Sierra Leone, Haiti and in Colombia where he has taught for many years during the summer at the University of the Andes in Bogotá.

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Why Nations Fail

52 pages • 1 hour read

Why Nations Fail: The Origins of Power, Prosperity, and Poverty

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Why Nations Fail: The Origins of Power, Prosperity, and Poverty (2012) is a nonfiction book co-authored by Daron Acemoglu and James A. Robinson . Acemoglu, an MIT economist renowned for his work on political economy, and Robinson, a political scientist and economist, combine their expertise to examine the reasons behind the varying levels of success and failure among nations. This interdisciplinary work, situated at the intersection of institutional economics, developmental economics, and economic history, examines a range of historical case studies to understand the driving forces behind democracy, its impact on economic performance, and the role of institutions in national development. The authors explore themes such as The Role of Institutions in Economic Development , The Impact of Political Systems on National Prosperity , and The Historical Evolution of Economic and Political Structures .

The book received generally positive reviews, although multiple economists and political theorists disputed some of its findings and have suggested that the dichotomy of inclusive versus extractive institutions on which most of the book’s argument rests oversimplifies the issue. Despite some criticisms, the book received multiple honors following its release, including the Paddy Power and Total Politics Political Book Award (International Affairs). It was shortlisted for the Financial Times and Goldman Sachs Business Book of the Year Award, long-listed for the Lionel Gelber Prize, and received an honorable mention for the Arthur Ross Book Award.

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Why Nations Fail consists of 15 chapters that explore what factors are responsible for the political and economic successes or failures of nation-states. It argues that the existing explanations about the causes of prosperity and poverty—which include geography, climate, culture, religion, or the ignorance of political leaders—are either lacking or flawed. The book supports its thesis by comparing national case studies, selecting countries that are similar in many of the above-mentioned factors but experience varying degrees of prosperity due to differing political and institutional choices.

On such example is that of Korea, which was partitioned into North Korea and South Korea in 1953. The countries’ economies have diverged dramatically, with South Korea becoming one of the richest countries in Asia, and North Korea becoming one of the poorest countries in the world due to its repressive government and lack of economic opportunity.

The border cities of Nogales, Arizona, and Nogales, Sonora, also bear out this thesis. The two cities share the same geographic area and culture, but their differing institutional environments make for a massive difference in prosperity.

The book’s central thesis is that economic prosperity depends above all else on the inclusiveness of economic and political institutions. Institutions are considered inclusive when a large group of people have a say in political decision-making, as opposed to countries where only a small group of people control political institutions and are unwilling to change with the times. A functioning democracy and pluralistic state guarantee the rule of law , which is essential to economic prosperity.

Inclusive institutions promote economic prosperity because they provide incentives that allow talent and creative ideas to flourish. By contrast, “extractive” institutions are those that permit the government to rule over and exploit others, extracting wealth from anyone not in the elite.

Nations with a history of extractive institutions, such as absolute monarchies and communist dictatorships, have not prospered. This is because entrepreneurs and citizens have less incentive to innovate and invest. Ruling elites are afraid of creative destruction , a term coined by Austrian economist Joseph Schumpeter that refers to the ongoing process of tearing down bad institutions while generating new, productive ones. Creative destruction creates new groups that compete for power against ruling elites, something dictatorships aim to avoid at all costs.

The book looks at multiple examples of autocratic countries that struggled economically but found new success after opening up their governmental process. One example is Great Britain after the Glorious Revolution of 1688, which saw the absolute monarchy replaced with a constitutional one, a move the book argues was essential for the Industrial Revolution.

Using this framework, the book looks at the recent economic boom in China, which has occurred despite the country’s autocratic government. The book argues that China’s recent past doesn’t contradict its central argument. The country’s economy has in fact modernized quite a bit in recent years under the reformist economic policies of Deng Xiaoping, the Chinese leader responsible for opening China up to the world after decades of a repressive regime following the Cultural Revolution. Thus, China demonstrates the pattern of liberalization leading to economic progress.

Economic growth changes the economic resource distribution and affects the country’s politics. Thus, the book argues that despite China’s current rapid growth, the country’s economy will collapse unless China continues to improve its political inclusiveness and open itself to economic and cultural opportunity.

The book concludes that vast differences in living standards and economic prosperity across the world are not historically, geographically, culturally, or ethnically predetermined but are instead primarily caused by differences in political and economic institutions. It discusses the role of empowerment in creating inclusive institutions and highlights how broad coalitions of diverse social groups, civil society, and a free media can drive the transition from extractive to inclusive institutions.

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June 6, 2024

Current Issue

‘Why Nations Fail’

August 16, 2012 issue

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In response to:

What Makes Countries Rich or Poor? from the June 7, 2012 issue

To the Editors :

Jared Diamond provides an engaging review of our book Why Nations Fail [ NYR , June 7]. Though Diamond accepts the importance of institutions and their political roots—the main focus of our book—and asserts that “perhaps they provide 50 percent of the explanation for national differences in prosperity,” his review is mostly concerned with defending an alternative perspective, which we have called the geography hypothesis. There is no surprise in this as Diamond is the most erudite and original proponent of this hypothesis, and our book dismisses it.

Diamond adds to his original thesis about the timing of the Neolithic Revolution shaping the patterns of intercontinental inequality claims that have more recently been articulated by economist Jeffrey Sachs on how tropical areas are condemned to poverty because of their greater disease burden and their poor soil quality, and how topography and natural resources are crucial determinants of prosperity. He also criticizes our book for not sufficiently grounding institutional dynamics within the geographic context—not explaining which types of natural resources are a curse and not linking institutional variation to geographic factors. Finally, he is critical of our discussion of the Neolithic Revolution. However, in each of these cases, Diamond does not do justice to our argument.

First, contrary to Diamond’s claim, there is nothing that contradicts tropical medicine and agricultural science in claiming that these are not major factors shaping differences in national prosperity. That these geographic factors cannot by themselves account for prosperity is illustrated by an empirical pattern we discuss—the “reversal of fortune.” Among the countries colonized by Europeans, those that were more prosperous before colonization ended up as relatively less prosperous today. This is prima facie evidence that, at least in the sample that makes up almost half of the countries in the world, geographic factors cannot account—while institutional ones can—for differences in prosperity as these factors haven’t changed, while fortunes have. Academic research also shows that once the effect of institutions is properly controlled for, there is no evidence that geographic factors have a significant impact on prosperity today.

Similarly, major improvements in health technology starting in the 1940s have made significant headway against diseases and have led to unparalleled increases in life expectancy in many parts of the world. But they have not led to faster growth in these areas over the last sixty years in contrast to what would have been expected if the disease burden were a crucial determinant of prosperity.

Second, though Diamond criticizes us for not explaining “which resources especially lend themselves to the curse,” it is not characteristics of a natural resource but the institutions that determine whether it is a curse or a blessing—diamonds are a curse for Sierra Leone and Angola, and a blessing for Botswana.

Third, Diamond claims that our revisionist take on the Neolithic Revolution, based on the idea that sedentary life and social complexity came before farming, suffers from a “complete absence of evidence” when in fact it is now the conventional wisdom amongst archaeologists. He also claims that the Fertile Crescent was the “only area in which local agriculture could have arisen” because of the presence of various species of wheat, even though agriculture originated in many places, for example in China, based not on wheat but rice. More importantly, however, our point was that once one examines the distribution of domesticable plants and animals more broadly, Diamond’s theory predicts that the Neolithic Revolution would happen first in Eurasia, but cannot account for differences in prosperity today, which are huge within Eurasia and not explained by the timing of the Neolithic Revolution (as recent research by Ola Olsson and Christopher Paik shows).

Fourth, Diamond suggests that, by eschewing geographic determinism, our theory is as if institutions appeared “randomly.” This is not a fair characterization. Though at times the process of institutional development has been influenced by geography or disease ecology (as our own academic research joint with Simon Johnson has documented), these are not the major factors shaping institutional variation today. But this does not mean that institutional dynamics are simply random; our book explains how institutional variation today is largely a systematic outcome of historical processes, and how these processes can be studied, revealing, for example, why Europe, the United States, and Australia are richer than the Middle East, Africa, and Latin America.

Daron Acemoglu James A. Robinson Cambridge, Massachusetts

Jared Diamond replies :

My review praised Daron Acemoglu and James Robinson for writing a wonderful book about the role of institutions in shaping why countries are rich or poor. The book’s limitations, repeated now in their letter, are that they dismiss the roles of all other factors, especially geographic factors. That’s because of their oversimplified view of geography’s effects; their criticizing the straw man that geography explains everything (it doesn’t, and it’s not an alternative perspective but an additional perspective); and their failure to explain the origins of good institutions themselves.

The first point of their four-point letter is that tropical medicine and agricultural science aren’t major factors shaping national differences in prosperity. But the reasons why those are indeed major factors are obvious and well known. Tropical diseases cause a skilled worker, who completes professional training by age thirty, to look forward to, on the average, just ten years of economic productivity in Zambia before dying at an average life span of around forty, but to be economically productive for thirty-five years until retiring at age sixty-five in the US, Europe, and Japan (average life span around eighty). Even while they are still alive, workers in the tropics are often sick and unable to work. Women in the tropics face big obstacles in entering the workforce, because of having to care for their sick babies, or being pregnant with or nursing babies to replace previous babies likely to die or already dead. That’s why economists other than Acemoglu and Robinson do find a significant effect of geographic factors on prosperity today, after properly controlling for the effect of institutions.

Second, Acemoglu and Robinson deny that characteristics of a natural resource determine whether it’s a curse or a blessing. But characteristics of diamonds and oil notoriously promote corruption and civil wars more than do characteristics of iron and timber.

Third, geography has had a big effect on modern prosperity through permitting local ancient origins of agriculture, in turn permitting sedentary life and social complexity. While sedentary life and social complexity did develop before farming in a few exceptional cases, Acemoglu and Robinson’s assertion that as a generalization it is conventional wisdom among archaeologists will be news to archaeologists. Acemoglu and Robinson misquote me in saying that I claim the Fertile Crescent to have been the only area where local agriculture could have arisen. Of course not: instead, I cited agricultural historians who showed that the Fertile Crescent was the only such area in western Eurasia; my book Guns, Germs, and Steel discussed at length how local agriculture also arose in at least eight areas outside western Eurasia. Acemoglu and Robinson are correct that the timing of the Neolithic Revolution doesn’t account for prosperity differences within Eurasia today; it “merely” accounts for about half of prosperity differences today around the world as a whole.

Finally, as readers may quickly confirm for themselves, it is indeed a fair characterization of Acemoglu and Robinson’s book to say that their theory is as if institutions appeared at random. Although their letter describes institutional variation today as a systematic outcome of historical processes, much of their book is actually devoted to relating story after story purportedly explaining how institutional variation developed unsystematically and at random, as a result of particular events happening in particular places at critical junctures.

To summarize, I agree with Acemoglu and Robinson that institutions are important. If they had said that, they would have written a completely wonderful book in which I would have found nothing to criticize. Unfortunately, they overstated their case and dismissed the roles of factors other than institutions. I continue to recommend their book as a sparkling account of the role of institutions. I hope that their next book will be an equally sparkling one, about the roles of those other factors.

August 16, 2012

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clock This article was published more than  12 years ago

Book review: ‘Why Nations Fail,’ by Daron Acemoglu and James A. Robinson

“Why Nations Fail” is a sweeping attempt to explain the gut-wrenching poverty that leaves 1.29 billion people in the developing world struggling to live on less than $1.25 a day. You might expect it to be a bleak, numbing read. It’s not. It’s bracing, garrulous, wildly ambitious and ultimately hopeful. It may, in fact, be a bit of a masterpiece.

Daron Acemoglu and James A. Robinson, two energetic, widely respected development scholars, start with a bit of perspective: Even in today’s glum economic climate, the average American is seven times as prosperous as the average Mexican, 10 times as prosperous as the average Peruvian, about 20 times as prosperous as the average inhabitant of sub-Saharan Africa and about 40 times as prosperous as the average citizen of such particularly desperate African countries as Mali, Ethiopia and Sierra Leone. What explains such stupefying disparities?

The authors’ answer is simple: “institutions, institutions, institutions.” They are impatient with traditional social-science arguments for the persistence of poverty, which variously chalk it up to bad geographic luck, hobbling cultural patterns, or ignorant leaders and technocrats. Instead, “Why Nations Fail” focuses on the historical currents and critical junctures that mold modern polities: the processes of institutional drift that produce political and economic institutions that can be either inclusive — focused on power-sharing, productivity, education, technological advances and the well-being of the nation as a whole; or extractive — bent on grabbing wealth and resources away from one part of society to benefit another.

To understand what extractive institutions look like, consider les Grosses Legumes (the Big Vegetables), the sardonic Congolese nickname for the obscenely pampered clique around Mobutu Sese Seko, the strongman who ruled what is now the Democratic Republic of the Congo from 1965 to 1997. When Mobutu decreed that he wanted a palace built for himself at his birthplace, the authors note, he made sure that the airport had a landing strip big enough to accommodate the Concordes he liked to rent from Air France. Mobutu and the Big Vegetables weren’t interested in developing Congo. They were interested in strip-mining it, sucking out its vast mineral wealth for themselves. They were, at best, vampire capitalists.

But the roots of Congo’s nightmarish poverty and strife go back centuries. Before the arrival of European imperialists, what was then known as the Kingdom of Kongo was ruled by the oligarchic forerunners of the Big Vegetables, who drew their staggering wealth from arbitrary taxation and a busy slave trade. And when the European colonists showed up, they made a dreadful situation even worse — especially under the rapacious rule of King Leopold II of Belgium.

When Congo finally won its independence in 1960, it was a feeble, decentralized state burdened with a predatory political class and exploitative economic institutions — too weak to deliver basic services but just strong enough to keep Mobutu and his cronies on top; too poor to provide for its citizenry but just wealthy enough to give elites something to fight over.

Acemoglu and Robinson argue that when you combine rotten regimes, exploitative elites and self-serving institutions with frail, decentralized states, you have something close to a prescription for poverty, conflict and even outright failure. “Nations fail,” the authors write, “when they have extractive economic institutions, supported by extractive political institutions that impede and even block economic growth.”

But even as vicious cycles such as Congo’s can churn out poverty, virtuous cycles can help bend the long arc of history toward growth and prosperity. Contrast the conflict and misery in Congo with Botswana — which, when it won its independence in 1966, had just 22 university graduates, seven miles of paved roads and glowering white-supremacist regimes on most of its borders. But Botswana today has “the highest per capita income in sub-Saharan Africa” — around the level of such success stories as Hungary and Costa Rica.

How did Botswana pull it off? “By quickly developing inclusive economic and political institutions after independence,” the authors write. Botswana holds regular elections, has never had a civil war and enforces property rights. It benefited, the authors argue, from modest centralization of the state and a tradition of limiting the power of tribal chiefs that had survived colonial rule. When diamonds were discovered, a far-sighted law ensured that the newfound riches were shared for the national good, not elite gain. At the critical juncture of independence, wise Botswanan leaders such as its first president, Seretse Khama, and his Botswana Democratic Party chose democracy over dictatorship and the public interest over private greed.

In other words: It’s the politics, stupid. Khama’s Botswana succeeded at building institutions that could produce prosperity. Mobutu’s Congo and Robert Mugabe’s Zimbabwe didn’t even try. Acemoglu and Robinson argue that the protesters in Egypt’s Tahrir Square had it right: They were being held back by a feckless, corrupt state and a society that wouldn’t let them fully use their talents. Egypt was poor “precisely because it has been ruled by a narrow elite that has organized society for their own benefit at the expense of the vast mass of people.”

Such unhappy nations as North Korea, Sierra Leone, Haiti and Somalia have all left authority concentrated in a few grasping hands, which use whatever resources they can grab to tighten their hold on power. The formula is stark: Inclusive governments and institutions mean prosperity, growth and sustained development; extractive governments and institutions mean poverty, privation and stagnation — even over the centuries. The depressing cycle in which one oligarchy often replaces another has meant that “the lands where the Industrial Revolution originally did not spread remain relatively poor.” Nothing succeeds like success, Acemoglu and Robinson argue, and nothing fails like failure.

So what about China, which is increasingly cited as a new model of “authoritarian growth”? The authors are respectful but ultimately unimpressed. They readily admit that extractive regimes can produce temporary economic growth so long as they’re politically centralized — just consider the pre-Brezhnev Soviet Union, whose economic system once had its own Western admirers. But while “Chinese economic institutions are incomparably more inclusive today than three decades ago,”China is still fundamentally saddled with an extractive regime.

In fairly short order, such authoritarian economies start to wheeze: By throttling the incentives for technological progress, creativity and innovation, they choke off sustained, long-term growth and prosperity. (“You cannot force people to think and have good ideas by threatening to shoot them,” the authors note dryly.) Chinese growth, they argue, “is based on the adoption of existing technologies and rapid investment,” not the anxiety-inducing process of creative destruction that produces lasting innovation and growth. By importing foreign technologies and exporting low-end products, China is playing a spirited game of catch-up — but that’s not how races are won.

So how can the United States help the developing world? Certainly not by cutting foreign aid or conditioning it; as the authors note, you’d hardly expect someone like Mobutu to suddenly chuck out the exploitative institutions that underpin his power “just for a little more foreign aid,” and even a bit of relief for the truly desperate, even if inefficiently administered, is a lot better than nothing. But ultimately, instead of trying to cajole leaders opposed to their people’s interests, the authors suggest we’d be better off structuring foreign aid so that it seeks to bring in marginalized and excluded groups and leaders, and empowers broader sections of the population. For Acemoglu and Robinson, it is not enough to simply swap one set of oligarchs for another.

" Why Nations Fail " isn't perfect. The basic taxonomy of inclusive vs. extractive starts to get repetitive. After chapters of brio, the authors seem almost sheepish about the vagueness of their concluding policy advice. And their scope and enthusiasm engender both chuckles of admiration — one fairly representative chapter whizzes from Soviet five-year plans to the Neolithic Revolution and the ancient Mayan city states — and the occasional cluck of caution.

It would take several battalions of regional specialists to double-check their history and analysis, and while the overall picture is detailed and convincing, the authors would have to have a truly superhuman batting average to get every nuance right. Their treatment of the Middle East, for instance, is largely persuasive, but they are a little harsh on the Ottoman Empire, which they basically write off as “highly absolutist” without noting its striking diversity and relatively inclusive sociopolitical arrangements, which often gave minority communities considerably more running room (and space for entrepreneurship) than their European co-religionists.

Acemoglu and Robinson have run the risks of ambition, and cheerfully so. For a book about the dismal science and some dismal plights, “Why Nations Fail” is a surprisingly captivating read. This is, in every sense, a big book. Readers will hope that it makes a big difference.

is a senior political scientist at the RAND Corporation and a former adviser to U.S. ambassador to the United Nations Susan Rice.

WHY NATIONS FAIL

The Origins of Power, Prosperity, and Poverty

By Daron Acemoglu and James A. Robinson

Crown. 529 pp. $30

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Military History

Let’s Not Do Another Civil War if We Can Help It, OK?

Three new books show us why the United States should do everything it can to nip the possibility in the bud.

A portion of the border wall between the United States and Mexico in 2021. Credit... Ariana Drehsler for The New York Times

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By Thomas E. Ricks

Thomas E. Ricks, the Book Review’s military history columnist, is the author of nine books. Most of them are about military affairs, but the next, scheduled to be published in June, is a mystery set on the Maine coast titled “Everyone Knows but You.”

• May 19, 2024

As we approach this November’s presidential election, “blood bath” is quickly becoming one of Donald Trump’s favorite new terms . If he does not take the White House, there will be a “blood bath” in the auto industry. President Biden’s immigration policies are causing a “blood bath” at the U.S. border with Mexico. In some corners, this imagery is understood as a threat: What will Trump supporters do if their favored candidate does not win? He has repeatedly suggested that violent unrest could follow his defeat. Would it be a reprise of the American Civil War?

If any contemporary historian can give us a clue, it might be Alan Taylor. In AMERICAN CIVIL WARS: A Continental History, 1850-1873 (Norton, 534 pp., $39.99), Taylor, a University of Virginia historian who has won the Pulitzer Prize twice, takes a broad look at the lead-up to and aftermath of the older conflict, including the way it transformed life in Mexico, Canada and the Caribbean.

Does this wide scope work? Yes and no. I don’t think this book makes us look at the Civil War in a new way, but Taylor is persuasive in his assertion that the American conflict shaped the entire continent. “The United States emerged from the war with a stronger federal government and greater military potential,” he concludes. “Intimidated by that enhanced power, Russians sold Alaska, the Spanish bolted from Santo Domingo and the French withdrew their forces from Mexico.”

“American Civil Wars” also dwells on how the signs of a coming Union victory encouraged the creation of the nation of Canada from a diverse collection of British-held provinces on the northern border of the United States. (Now that the United States is a global power, any civil conflict in America would ripple around the world. Think of the 1973 Arab oil embargo, when lingering divisions over the Vietnam War and the Watergate scandal made the U.S. government look weak and distracted; now imagine that on steroids.)

Taylor is a formidable historian and masterly writer. He briskly disposes of some persistent myths about the Civil War. If the fighting really was about states’ rights, he asks, why did the Confederate constitution ban its states from ever abolishing slavery? On the subject of Confederate fears of race mixing, he states flatly that “after centuries of sexually exploiting enslaved women, Southern whites projected their behavior onto Blacks.”

As for anyone who believes that the current turbulence on the U.S.-Mexican border is an anomaly, they will be edified by Taylor’s account of how Texans attacked Mexico for offering freedom to runaway slaves. During the early 1850s, he notes, about 4,000 enslaved people made it across the Texas border to freedom. In response, some 111 Texas Rangers rode across the Rio Grande to “attack, loot and burn the fugitive haven at Piedras Negras.”

After the Civil War, the U.S. Army general Philip Sheridan helped Mexican revolutionaries access 30,000 modern rifles, stockpiling them within easy reach along the Rio Grande in Texas. American weapons manufacturers were eager to sell off their excess inventory, which, Taylor writes, had been “refined in the recent blood bath.”

The historian and retired U.S. Army officer Thomas Ty Smith picks up the story of trouble on the border in THE GARZA WAR IN SOUTH TEXAS: A Military History, 1890-1893 (University of Oklahoma Press, 172 pp., $29.95). Despite all the talk today of an “invasion” coming up from Mexico, his short study is a useful reminder that havoc often has flowed southward across the border. In the early 1890s, the Mexican government was again deeply frustrated with the failure of the American government to stop cross-border incursions by Mexican revolutionaries who enjoyed sanctuary in some parts of Texas.

“The Garza War in South Texas” makes clear that, if there were another violent fracture on this continent today, we’d be lucky to have only two sides to the conflict. Civilian leaders near the border were often at odds with U.S. Army personnel, who in turn, notes Smith, thought many U.S. marshals were overly sympathetic to the revolutionaries. Officials in two Texas border counties brought charges against an Army officer, accusing him of conducting warrantless searches and arresting innocent people in the hunt for rebels. Meanwhile, one of the local scouts employed by the Army was arrested as an insurrectionist.

All civil conflict is complex, but few civil wars were so agonizingly byzantine as the Russian civil war that erupted as World War I ended and the Bolsheviks rose to power. In A NASTY LITTLE WAR: The Western Intervention Into the Russian Civil War (Basic Books, 366 pp., $32), Anna Reid, a former Ukraine correspondent for The Economist and The Daily Telegraph, focuses on the efforts led by France, the United States and, most of all, the British to support anti-Bolshevik forces in that fight.

Despite the book’s title, it was not a small campaign. Some 180,000 soldiers from 16 Allied nations were sent to try to prevent a Red victory. The Americans were fresh-faced newcomers; the British troops, by contrast, were those unfit for duty on the Western Front, “mostly wounded, gassed or otherwise unhealthy,” writes Reid.

No one was happy to be there. Not only did the largely czarist White Army suffer multiple troop rebellions, one of the White units that was led by British officers rose up and killed their Western European commanders. French sailors aboard two ships off the Crimean Peninsula mutinied, pulled down the tricolor, ran up the Red flag and then went ashore to join a pro-Bolshevik demonstration. There was even a renegade German army operating in Estonia, which declined to cooperate with the Allied commanders to whom they had just surrendered in the previous war.

All this insubordination went on despite the extreme acts of violence some used to try to keep order. One of the White generals in Crimea was Yakov Slashchyov, “a psychopathic cocaine addict who rode about with a caged crow attached to his saddle.” On a single morning, he seems to have left the bodies of 200 soldiers “shot in the back of the head” on a train platform. By evening, more corpses had been strung up from the station’s lampposts.

What, if anything, does all this tell us about Vladimir Putin’s war against Ukraine? “Outsiders,” Reid notes, “often get Russia spectacularly wrong.” But there is another, less apparent lesson to be learned: “Putin will fail for the same reason that the Whites did: because he underestimates the desire for freedom of the non-Russian nations.” A good lesson, too, for anyone today who thinks they can impose their vision of America on others through violence and intimidation.

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