Why Nations Fail

in Cairo, made her views clear as she demonstrated in Tahrir Square: We are suffering from corruption, oppression and bad education. We are living amid a corrupt system which has to change. Another in the square, Mosaab El Shami, twenty, a pharmacy student, concurred: I hope that by the end of this year we will have an elected government and that universal freedoms are applied and that we put an end to the corruption that has taken over this country. The protestors in Tahrir Square spoke with one voice about the corruption of the government, its inability to deliver public services, and the lack of equality of opportunity in their country. They particularly complained about repression and the absence of political rights. As Mohamed ElBaradei, former director of the International Atomic Energy Agency, wrote on Twitter on January 13, 2011, Tunisia: repression + absence of social justice + denial of channels for peaceful change = a ticking bomb. Egyptians and Tunisians both saw their economic problems as being fundamentally caused by their lack of political rights. When the protestors started to formulate their demands more systematically, the fi rst twelve immediate demands posted by Wael Khalil, the software engineer and blogger who emerged as one of the leaders of the Egyptian protest movement, were all focused on political change. Issues such as raising the minimum wage appeared only among the transitional demands that were to be implemented later.

To Egyptians, the things that have held them back include an ineffective and corrupt state and a society where they cannot use their talent, ambition, ingenuity, and what education they can get. But they also recognize that the roots of these problems are political. All the economic impediments they face stem from the way political power in Egypt is exercised and monopolized by a narrow elite. This, they understand, is the fi rst thing that h

prevent the efforts by elites to undermine them

12.
The Vicious Circle
How institutions that create poverty generate negative
feedback loops and endure
 
13.
Why Nations Fail Today
Institutions, institutions, institutions
 
14.
Breaking the Mold
How a few countries changed their economic trajectory by
changing their institutions
 
15.
Understanding Prosperity and Poverty
How the world could have been different and how understanding
this can explain why most attempts to combat poverty have failed
 
Acknowledgments
Bibliographical Essay and Sources
References
Index

its simplicity and power. A wonderfully readable mix of history, political science, and economics, this book will change the way we think about economic development. Why Nations Fail is a must-read book." Steven Levitt, coauthor of Freakonomics

"You will have three reasons to love this book. It s about national income differences within the modern world, perhaps the biggest problem facing the world today. It s peppered with fascinating stories that will make you a spellbinder at cocktail parties such as why Botswana is prospering and Sierra Leone isn t. And it s a great read. Like me, you may succumb to reading it in one go, and then you may come back to it again and again." Jared Diamond, Pulitzer Prize winning author of the bestsellers Guns, Germs, and Steel and Collapse

"A compelling and highly readable book. And [the] conclusion is a cheering one: the authoritarian extractive institutions like the ones that drive growth in China today are bound to run out of steam. Without the inclusive institutions that first evolved in the West, sustainable growth is impossible, because only a truly free society can foster genuine innovation and the creative destruction that is its corollary." Niall Ferguson, author of The Ascent of Money

"Some time ago a little-known Scottish philosopher wrote a book on what makes nations succeed and what makes them fail. The Wealth of Nations is still being read today. With the same perspicacity and with the same broad historical perspective, Daron Acemoglu and James Robinson have retackled this same question for our own times. Two centuries from now our great-great- . . . -great grandchildren will be, similarly, reading Why Nations Fail." George Akerlof, Nobel laureate in economics, 2001

"Why Nations Fail is so good in so many ways that I despair of listing them all. It explains huge swathes of human history. It is equally at home in Asia, Africa and the Americas. It is fair to left and right and every flavor in between. It doesn t pull punches but doesn t insult just to gain attention. It illuminates the past as it gives us a new way to think about the present. It is that rare book in economics that convinces the reader that the authors want the best for ordinary people. It will provide scholars with years of argument and ordinary readers with years of did-you-know-that dinner conversation. It has some jokes, which are always welcome. It is an excellent book and should be purchased forthwith, so to encourage the authors to keep working." Charles C. Mann, author of 1491 and 1493

Imagine sitting around a table listening to Jared Diamond, Joseph Schumpeter, and James Madison reflect on over two thousand years of political and economic history.  Imagine that they weave their ideas into a coherent theoretical framework based on limiting extraction, promoting creative destruction, and creating strong political institutions that share power and you begin to see the contribution of this brilliant and engagingly written book. Scott E. Page, University of Michigan and Santa Fre Institute

This fascinating and readable book centers on the complex joint evolution of political and economic institutions, in good directions and bad. It strikes a delicate balance between the logic of political and economic behavior and the shifts in direction created by contingent historical events, large and small at critical junctures.' Acemoglu and Robinson provide an enormous range of historical examples to show how such shifts can tilt toward favorable institutions, progressive innovation and economic success or toward repressive institutions and eventual decay or stagnation. Somehow they can generate both excitement and reflection. Robert Solow, Nobel Laureate in Economics, 1987

It s the politics, stupid! That is Acemoglu and Robinson s simple yet compelling explanation for why so many countries fail to develop. From the absolutism of the Stuarts to the antebellum South, from Sierra Leone to Colombia, this magisterial work shows how powerful elites rig the rules to benefit themselves at the expense of the many.  Charting a careful course between the pessimists and optimists, the authors demonstrate history and geography need not be destiny. But they also document how sensible economic ideas and policies often achieve little in the absence of fundamental political change. Dani Rodrik, Kennedy School of Government, Harvard University

Two of the world s best and most erudite economists turn to the hardest  issue of all: why are some nations poor and others rich? Written with a deep knowledge of economics and political history, this is perhaps the most powerful statement made to date that institutions matter.   A provocative, instructive, yet thoroughly enthralling book. Joel Mokyr, Robert H. Strotz Professor of Arts and Sciences and Professor of Economics and History, Northwestern University

A brilliant and uplifting book yet also a deeply disturbing wake-up call. Acemoglu and Robinson lay out a convincing theory of almost everything to do with economic development. Countries rise when they put in place the right pro-growth political institutions and they fail often spectacularly when those institutions ossify or fail to adapt.  Powerful people always and everywhere seek to grab complete control over government, undermining broader social progress for their own greed. Keep those people in check with effective democracy or watch your nation fail. Simon Johnson, co-author of 13 Bankers and professor at MIT Sloan

This important and insightful book, packed with historical examples, makes the case that inclusive political institutions in support of inclusive economic institutions is key to sustained prosperity. The book reviews how some good regimes got launched and then had a virtuous spiral, while bad regimes remain in a vicious spiral.  This is important analysis not to be missed. Peter Diamond, Nobel Laureate in Economics
 
Acemoglu and Robinson have made an important contribution to the debate as to why similar-looking nations differ so greatly in their economic and political development. Through a broad multiplicity of historical examples, they show how institutional developments, sometimes based on very accidental circumstances, have had enormous consequences. The openness of a society, its willingness to permit creative destruction, and the rule of  appear to be decisive for economic development. Kenneth Arrow, Professor Emeritus, Stanford University, Nobel Laureate in Economics, 1972
 
Acemoglu and Robinson two of the world's leading experts on development reveal why it is not geography, disease, or culture which explains why some nations are rich and some poor, but rather a matter of institutions and politics. This highly accessible book provides welcome insight to specialists and general readers alike. Francis Fukuyama, author of The End of History and the Last Man and The Origins of Political Order

Some time ago a little known Scottish philosopher wrote a book on what makes nations succeed and what makes them fail.  The Wealth of Nations is still being read today.  With the same perspicacity and with the same broad historical perspective, Daron Acemoglu and James Robinson have re-tackled this same question for our own times.  Two centuries from now our great-great- -great grandchildren will be, similarly, reading Why Nations Fail. George Akerlof, Nobel Laureate in Economics, 2001
 
In this stunningly wide ranging book Acemoglu and Robinson ask a simple but vital question, why do some nations become rich and others remain poor?  Their answer is also simple because some polities develop more inclusive political institutions.  What is remarkable about the book is the crispness and clarity of the writing, the elegance of the argument, and the remarkable richness of historical detail.  This book is a must read at a moment where governments right across the western world must come up with the political will to deal with a debt crisis of unusual proportions. Steve Pincus, Bradford Durfee Professor of History and International and Area Studies, Yale University
 
The authors convincingly show that countries escape poverty only when they have appropriate economic institutions, especially private property and competition. More originally, they argue countries are more likely to develop the right institutions when they have an open pluralistic political system with competition for political office, a widespread electorate, and openness to new political leaders. This intimate connection between political and economic institutions is the heart of their major contribution, and has resulted in a study of great vitality on one of the crucial questions in economics and political economy. Gary S. Becker, Nobel Laureate in Economics, 1992
 
This not only a fascinating and interesting book: it is a really important one.  The highly original research that Professors Acemoglu and Robinson have done, and continue to do,  on how economic forces, politics and policy choices evolve together and constrain each other, and how institutions affect that evolution, is essential to understanding the successes and failures of societies and nations.  And here, in this book, these insights come in a highly accessible, indeed riveting form.  Those who pick this book up and start reading will have trouble putting it down. ¯Michael Spence, Nobel Laureate in Economics, 2001

"In this delightfully readable romp through 400 years of  history, two of the giants of contemporary social science bring us an inspiring and important message: it is freedom that makes the world rich. Let tyrants everywhere tremble!" Ian Morris, Stanford University, author of Why the West Rules For Now

Acemoglu and Robinson pose the fundamental question concerning the development of the bottom billion. Their answers are profound, lucid, and convincing. Paul Collier, Professor of Economics, Oxford University, and author of The Bottom Billion