Why Nations Fail: The most important work to date on why some countries are rich and others poor, and why some experience dictators, coups, revolutions, and political violence while others do not is Daron Acemoglu and James A. Robinson’s Why Nations Fail: The Origins of Power, Prosperity, and Poverty.
The book is a grand exploration of history, economics, and political science, drawing upon a wealth of examples across continents and centuries to illustrate its central thesis: from the noted theories of economics, it is clear that the success or otherwise of a country depends on its political and or economic systems.
In this review, I will briefly review Acemoglu and Robinson’s argument in greater detail, pay attention to the examples with which they illustrate their thesis, and analyze some of the responses to the book since its publication. In addition, I will examine what contribution this book makes to the understanding of development policy and today’s world economy order.
The Central Thesis: Who is Driving Market Institutions

In its essence, the book Why Nations Fail sees the main reason for the efficiency or inefficiency of nations in their political and economic institutions. The authors distinguish between two broad types of institutions
- Inclusive
- Extractive
The institutions facilitate large numbers of people’s engagement in economic life, promote innovation, and provide incentives for people to apply efforts, invest, and succeed. At the same time, extractive institutions centralize power and resources within a few people making it hard for the average person to invest in innovations.
According to the authors, Acemoglu and Robinson, these nations are bound to succeed if their institutions are inclusive which means property rights are protected, the rule of law is observed and there is democracy in the country. Those nations with extractive institutions that centralize power within the ruling elites and structure economic activity in a way that serves the interests of the rulers to the detriment of the ruled are likely to remain poor.
Acemoglu and Robinson also focus on the political institutions as contributing to the economic results. Effective political institutions that share power and are Anti–Authoritarian Institutions or Institutions that control the power of rulers are essential in the formulation of effective institutions that support the sharing of resources and the economic growth of a country. Again, when politics fails to be integrated into society, then the economic institutions are exploitative, and sustained development finds it hard to materialize.
The Geography Hypothesis, the Culture Hypothesis, and the Ignorance Hypothesis

Acemoglu and Robinson take time in their publication to provide arguments that work to dismiss some of the prevalent theories regarding why nations fail. Three of them are the geography hypothesis, the culture hypothesis, and the ignorance hypothesis.
Geography Hypothesis: This class of argument contends that climate, terrain, and distance to natural resources are the major causes of the presence or absence of wealth in the nation.
For example, tropical nations are considered to be in a state of poverty because of diseases such as malaria or difficult farming conditions. Acemoglu and Robinson disagree with this by using Singapore, or Botswana as examples of geographical conditions that may be unfavorable but favor the development of inclusive institutions and, therefore, growth.
Culture Hypothesis
This rationale argues that reasons like religion, work attitudes, or beliefs account for the variation in economic development among countries. The authors dismiss this by noting that despite common culture, it is possible to find countries with different institutional systems with markedly different, economic performances. Such as North and South Korea, both starting with the same history and culture, but due to different institutions North Korea and South Korea have chosen completely different economic paths.
Ignorance Hypothesis
As per this theory, nations fail mainly due to the lack of knowledge of their leadership for economic development. Acemoglu and Robinson don’t agree with this view; they say that most leaders of extractive institutions know very well that there are policies that if adopted will lead to growth, but they will never adopt them because these policies will erode their institutions.
Historical Case Studies
Perhaps one of the largest virtues of the book is the historical data analyzed in this work. Acemoglu and Robinson show the readers comprehensive examples from global societies to explain how the institutional framework defines success or failure in countries. Here are a few notable examples:
North and South Korea

North and South Korea are perhaps the most vivid examples the authors discuss. The Korean peninsula that emerged from World War II was divided along the 38 parallel for the formation of two different sovereign states endowed with dissimilar political and economic structures. While South Korea moved to inclusive institutions and has now become one of the wealthiest countries in the world, the North’s extractive state ruled by Kim has led to poverty and oppression.
Colonial Latin America and North America
Acemoglu and Robinson compare and contrast how colonialism has fared in Latin America and North America. In Latin America Spaniards developed extractive institutions where most of the wealth belonged to European elites, and the native people were either enslaved or disappeared.
However, English settlers in North America created quite open institutions that enabled property and all forms of commercial activity. According to the authors, institutional divergence is the reason why the US and Canada have become rich, whereas Latin America has remained poor and unequal.
The Industrial Revolution in England
Worse still, the authors amplify that England needed political change and cite the glorious revolution of 1688 which limited the power of kingship and enhanced the parliament. This change in politics paved the way for the emergence of the inclusive institutions that supported the Industrial Revolution.
As many other books and articles have discussed, English institutions, unlike many other European societies, supported competition, creativity, and broad economic participation.
Zimbabwe

The authors also note Zimbabwe as a recent example of how extractive institutions can ruin a country’s economy. Despite the fact that the opposition and other critics accused Mugabe’s government of racing black Zimbabwean farmers, the government of Zimbabwe took over the land from white farmers. That is why the economy declined and millions of citizens of Zimbabwe remain without work and life necessities.
Critical Temporal Points And The Framework Of Path Dependency
Acemoglu and Robinson insist that the formation of institutions depends on the historical ‘choice points’ in other words such situations when the shift in political and or economic arrangements makes it possible for either institutions that include everybody or those that only enrich a few to be formed.
For example, the black death growing in Europe in the 14th century wiped out a big chunk of the population forcing feudalism to weaken thereby providing windows of vulnerability to more liberal structures to be established in certain parts.
After certain institutions are set, they will remain as such due to path dependence. This means that whatever direction is chosen at crucial moments will remain with society for a long period of time thus applying tremendous amounts of pressure on nations attempting to shift the architecture of their institutions.
For instance, the extractive institutions set during colonialism in most African and Latin American states have endured the current subjugation.
Criticisms And Debates
It seems that the academic and professional societies have applauded Why Nations Fail for the general assertions that were made when the book was published. However, it has also prompted controversy among scholars and researchers of different fields. Some of the most prominent critiques include:
Overemphasis on Institutions: Some scholars, though, say that they give too much emphasis on institutions as the main driver of a nation’s prosperity or lack of it. Of course, institutions do matter, but so do geography, natural resources, and the state of the global economy.
For instance, critics have used Saudi Arabia as an example of countries with extractive institutions but nevertheless has geared a lot of wealth from its natural endowment in this case oil.
Historical Determinism
Some scholars have criticized the authors for historical determinism They argued that once a country develops extractive institutions, it will always be poor. Such critiques would reduce the possibility of agency and change, utilizing samples that allow for transition from extracting to inclusive institutions in the South Korean and Chinese realities due to crucial political and economic transformations.
Neglect of Global Factors
The other criticism is that Why Nations Fail omits an examination of the role of the world in nation-building processes. To this shock, opponents say that international trade, foreign assistance, and geostrategic factors can influence the success or failure of a country, but they remain neglected in the book. For example, Singapore and South Korea’s economic success is attributed to their location in the trade web and to regional markets.
Cultural Factors
However, some critics state that cultural factors can be excluded because the authors did not support the culture hypothesis. For instance, Max Weber’s Protestant ethic theory highlights that cultural aspects of growth such as religion can impact the economic model.
Vivid examples given by Acemoglu and Robinson concerning the similar cultures of countries but the different effectiveness of their institutions and the economic rates do not satisfy critics’ arguments about cultural activities in institutions and the economy.
Policy Implications and Contemporary Practical Relevance

Why Nations Fail is a book of immense relevance to policymakers especially for those in the development arena. According to the book, growth-enhancing policies in developing countries always require building inclusive institutions, not just aid or the sell-rest narratives of free trade or privatization. The authors believe that political liberalization is key to economic liberalization as viewed from the Chinese experience.
The book also has relevance with present-day discourse on increasing inequality and populism in developed democracies. Acemoglu and Robinson pointed out that it is wrong to consider that the nations which have developed today and where inclusive institutions were established during history cannot be threatened by the emergence of extractive ones.
Over the past couple of years, people have increasingly worried about the level of inequality and the decline of democracy in Western states such as the USA and Great Britain. Why Nations Fail is a useful timely check so that we don’t forget that institutions that we take for granted as inclusive and functioning successfully, indeed need active, sustained political work and attention.
Conclusion
The book Why Nations Fail by Daron Acemoglu and James A. Robinson provides a powerful analysis of institutions, that determine the success or failures of nations. The authors succeed in presenting a convincing argument that within histories and across countries, where institutions have been inclusive, countries have economically flourished, whilst where institutions have been extractive, countries have been condemned to economic decline and poverty.
Nonetheless, despite the controversy and criticism that it has called, the book is a significant contribution to the field of development economics and political science. The ideas presented in Why Nations Fail to challenge conventional wisdom about the causes of poverty and offer a hopeful message.
It proves that none of the nations is predetermined to fail by geography or culture but by the decision made regarding the type of political and economic regime chosen. Consequently, the book is helpful for policymakers, scholars, and everyone who wants to understand the perspective of global development.
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