There are various questions that economists have resorted to when trying to promote the development of a country through the elimination of poverty. Questions that address the persistent poverty in developing countries, reasons why some nations are poorer than others, and the characteristics that lead to poverty, always come up when finding ways of addressing the issue. Certain elements such as climate change, geographical location, culture, leadership styles have been put forward as the main reasons behind poverty trap although Acemoglu and Robinson’s book on ‘Why Nations Fail: The Origins of Power, Prosperity, and Poverty’ dismisses the above. According to Acemoglu and Robinson, the relationship between economic development and the political institutions within a country, have an undeniable positive correlation.
Why Nations Fail is a discussion of poverty, power, and prosperity. Countries have different economic success levels because they have placed different laws, institutions, and incentives. There are countries that have promoted efficient usage of talents and skills among their citizens, for example, South Korea and the United States. They have also encouraged their citizens to have freedom of expression, speech, and access to information whenever there are certain national or political activities, for example, during elections. More so, they have various institutions in place that ensure that their citizens’ security is strong.
Acemoglu and Robinson argue, therefore, about the reason that the success or failure of a country’s economy is manmade due to institutional configurations. To support their facts, the authors start to compare the difference between Nogales in Mexico with its namesake in Arizona. The authors describe that though the US- Mexican border between the two cities stretches thin, one city has different characteristics compared to the other in overall health, population density, security, culture, and living standards. The authors, thus, argue that the difference between these two cities is based on the different sets of institutions between them.
Successful countries always follow inclusive regimes through encouraging their citizens by rewarding them individually. Citizens from such countries enjoy secure property rights, freedom to contract, public services, and rule of law. The government and the state of the said countries have enforced law and order that discourages corruption, theft, and other vices. Every citizen with such an environment equally enjoys what the state provides.
On the other hand, countries of Latin America and North Korea, for example, have extractive institutions that end up discouraging their citizens leading to a low level of productive enterprises. Citizens from such countries also experience insecurity because of risky property rights. In addition, they also experience poorly maintained public services, and they lack the freedom of voting during a public election. Also, such countries are usually controlled by a certain group of organizations or people, who also get their wealth from a larger group. A small, more powerful group or those who have a higher elite status are the ones who benefit from the state economy.
In order to have a strong economic institution, a country should ensure that there is a strong sense of political freedom. Free choice when selecting leaders during public elections should be practiced. There should also be a distribution of political power, for example, during taxation and when formulating laws for a nation to succeed.
In addition, the success or failure of a country’s economy is also influenced by the country’s historic failures and successes. An example outlined in the book explains that countries that have been colonized, are usually affected in the future while those who are the colonizers tend to be richer (for example the Spanish Crown). The authors also mention another example that shows history’s effect on a country’s economy through the divergence between western and eastern Europe. In the 14th century, there was a plague that ended up taking the lives of a large number of citizens and as a result, there were inadequate labor skills on the market or rather a labor shortage.
The book also mentions the different theories from various economists and researchers that explain economic poverty and underdevelopment. One theory which is discussed, argues that climate changes affect a country’s economy based on where the country is geographically located. Other economists have also argued that culture affects a country’s economy. For example, there are countries whose citizens are not productive because they may not want to work hard. This theory is in line with Max Weber’s Protestant ethic argument. Another theory argues that the elites of a country should be able to provide adequate knowledge and economic advice for it to develop. There is also the issue of social mobility that has always been linked with poverty in some African countries.
However, according to the authors, the above theories are not credible because they have argued that the success or failure of a country’s economy is manmade due to institutional configurations. They illustrate that further by bringing forward the difference between the East and West Germany, Nogales, and the two Koreas. They could not be explained by culture, elite ignorance, climate, or location but are explained by the institutions of politics and the outcomes of the economies. The African colonizers who maintained extractive political institutions were the ones who plunged the continent further into poverty.
States and the way political leaders have organized the economic and political institutions are key in developing the economy of a country. Whenever the citizens are secure and stable, they are likely to be more motivated to use economic opportunities because the government has shown them its accountability and responsibility.
The points that are raised in the theory of the book present a powerful analysis of the topics that are discussed as the authors have used historical examples to support their claims. The reader thus has an advantage of learning and acquiring in-depth knowledge of history from different countries. This is because of the various examples that have been used from the ancient world like the Romans, France, and the western revolutions, China, Somalia, and the Aztecs.
The reader also has the advantage of gaining sufficient knowledge of the political and economic growth processes and also has an adequate understanding of some of the challenges that face developing countries. The authors have simplified the book for the reader enabling them to enjoy it and at the same time engaging him in various discussions (Vukovi?).
Also, issues that are related to transitional institutions have been mentioned by the authors. This is because they affect the past and the future of any economy of a country. For example, the United Nations or the European Union are vital organizations in today’s world. Also, there is the issue of competition between nations and countries which also should be taken into consideration when talking about development (Boldrin, Levine, and Modica).
On the other hand, the authors tend to repeat themselves when they are elaborating on their thesis. Also, Angelou argues that the authors have not completely tackled all of the factors that make nations fall. Other issues like violence in states also contribute to negative economic growth. For example, the failure of Carthage as a state could be credited by the violent destruction caused by the Roman Republic because it had used its many resources to trump it in the first place. This means that it did not fail because of the inclusive theory as stated by the authors (Angelou).
Bearing in mind that currently, the world is globalized, issues like technology, economic risks, and international dynamics also play a major role when it comes to development. These factors have not been listed or explained by the authors in the book meaning that the authors did not exhaust all of the variables. However, the authors did mention the issue of how technology and innovation contribute to development when they were discussing the Ottoman Empire.There are times when a global economy imbalance affects the economy of countries that have already adopted the inclusive institution theory (Angelou). Many European countries failed because of the global economic imbalance that occurred in 1992.
The authors have also failed to adequately demonstrate the causality between success and inclusiveness (Angelou). There are researchers who argue that there are countries that still failed despite adapting towards institution inclusiveness because the adaptation of that theory still fails to assure a nation that it will have a responsible government (Angelou). Sometimes, the inclusion of the public in politics will still lead to the wrong decision by a nation, which will in turn result in its economic downfall. Though not perfect, this book offers comprehensive and compelling arguments within the narrative of social science to suggest possible means in tackling the issue of development of nations with the hope that it inspires change.
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