Review of The Book Why Nations Fail

Two well-known economists - Daron Acemoglu and James Robinson - co-authored a book called “Why Nations Fail: The Origins of Power, Prosperity and Poverty”. Daron Acemoglu is a Turkish-born American economist, he is “Elizabeth and James Killian Professor of Economics in the Department of Economics at the Massachusetts Institute of Technology”. He graduated from the University of York with a Bachelor degree in economics in 1989, and a Master of Science in mathematical economics and econometrics from London School of Economics in 1990 and finally his PhD was in economics and it was from the same institution in 1992. He is affiliated with different institutes and associations as well as research centers such as the Center of Economic Policy Research, the European Economic Association, the Institute of Labor Economics and the National Bureau Economic Research, etc.… As for the second author -James Robinson- He is a British “prominent political scientist and economist and the Director of the Pearson Institute for the Study and Resolution of Global Conflicts”. James Robinson has a Bachelor of Science from the London School of Economics and Political Science, a Master’s degree from the University of Warwick and finally he obtained his PhD from Yale University. Robinson had many occupations: from 2009 to 2011, he was a member of the board of the global Development Network, he was also the “Wilbur A. Cowett Professor of Government at Harvard University and a faculty associate at Harvard’s Institute for Quantitative Social Science and the Weather head Center for International Affairs”. I believe that both Daron Acemoglu and James Robinson are conspicuous, eminent and outstanding economists which definitely make them qualified to write such a book. They both have a rich educational backgrounds, a marvelous career experiences, a plenty of awards and fellowships and they have done pioneering and groundbreaking papers and journal articles on different topics in economics which made them eligible to tackle all the important points in their book and they definitely have the expertise to analyze and examine the political changes and their relation with political systems and institutions as well as the economic growth in various countries. This book was published in 2012 and it is a first edition, this means that it is not outdated and it can be used to evaluate and interpret current issues in today’s international system. There is a second edition of the book which was published in 2013, and apart from the book’s cover, everything was kept the same (the chapters and content in general). 

“Why Nations Fail: The Origins of Power, Prosperity and Poverty” is an insightful and uplifting book that explains and answers one major questions which is why some nations reach prosperity while other remain stuck in poverty?. The two authors demonstrated throughout the book, using historical examples as well as their deep and rich expertise and proficiency in political history and economics, that the answer to this question is mainly the “political and economic manmade institutions”. By this I mean that geography and culture are not the good answer to the previous question as many believe it to be, but rather institutions’ developments that have a tight and close connection with both successes and collapses of different nations and societies. The authors started by an introduction where they clarified the impact that the rule of elites has on the advancement and progress of numerous societies, and the example they gave - which is Egypt - definitely cleared up this statement since “Egypt has been ruled by a narrow elite that have organized society for their own benefit at the expense of the vast mass of people”. This specific example was contrasted by how the overthrow of the elites from the positions of power led to prosperity, different political rights and economic opportunities that helped countries such as the United States or Great Britain to be major powers nowadays. After reading the book, I see that it can be divided to four major parts: the first part is mainly about the main examples, the second part can be named “the refute of hypotheses”, the third part will focus on the role of institutions and the difference between two major scenarios. 

For the first part of the book, it can be said that the authors gave two main examples so that the reader can understand their main argument and what they are trying to demonstrate throughout the whole book. The first example concerns two different stories of the same city which is called “Nogales”. As for the second example, it is the well-known “North Korea vs. South Korea”. Both scenarios show that there are two sides of the same coin: the first side is prosperous, wealthy and has a booming economy as well as good education and infrastructure (this is the case of Nogales, Arizona and South Korea). As for the other side of the coin, it is where people are stuck in poverty, they lack development and good living standards and they suffer from economic stagnation (this is the case of Nogales, Sonora and North Korea). For the second part, the authors tried to explain these differences by suggesting three main hypotheses or dominant theories that they have realized their inefficiency later on. The first one is “the geography hypothesis” which claims that “the great divide between rich and poor countries is created by geographical differences” and it blames rough climate and tropical disasters. The second one is “the culture hypothesis” and it states that there is a strong link between prosperity and culture and this can be defined by the productivity of the population based on their religious, normative and ethical characteristics. As for the third and last one, it’s the “ignorance hypothesis” which asserts that “world inequality exists because we or our rulers do not know how to make poor countries rich”, and by this most of the scholars or economists who claim this hypothesis argue that if countries had better economic strategy or device they will definitely be able to emerge and come out from poverty. Each of these theories and claims was discovered later on to be faulty and deficient by the two authors. The authors suggested that these differences between North and South Korea and the two different parts of Nogales as well as other parts of the world cannot be analyzed and explained using geography, culture and ignorance. However, they assumed that “the institutional differences play the critical role in explaining economic growth throughout the ages”. By this they mean that the differences between nations and countries in the world are due to different arrays of politics and political institutions that create a sort of different economic institutions that are “critical for determining whether a country is poor or prosperous and what economic institutions a country has”. The latter argument will lead us to the third part which will focus on the role of institutions and the two different scenarios that were presented by the authors. Acemoglu and Robinson started their argument by presenting a range of historical events and examples and their critical junctures which helped in “shaping the path of economic and political institutions and enabling us to have a more complete theory of the origins of differences in poverty and prosperity”. The question that we should ask now is the following: what are the different political and economic institutions that create these differences in the international system? 

In order to answer this question, the authors argued that there is a symbiotic relationship between political and economic institutions. In addition to that, they suggested two major scenarios -types of institutions - which helps the reader understand what led to diverging development paths of nations. The first scenario is the “virtuous cycle of prosperity” which includes “inclusive” political and economic institutions - we can give here as an example United States and United Kingdom-. This virtuous circle is based on major mechanisms. The first is pluralistic political institutions which makes it hard to have a usurpation of power by one major figure and this means that the spread of democracies and the reduction of dictatorships will be encouraged. The second is the inclusive political institutions which encourages the spread of inclusive economic institutions that “enforce property rights, create a level playing field, and encourage investments in new technologies and skills which is more conducive to economic growth”. The second scenario is the “vicious cycle” which includes “extractive” political and economic institutions -this case scenario can explain the first two examples North Korea and Nogales, Sonora. This vicious circle is based on major characteristics. On one hand, we have the extractive political institutions “which concentrate power in the hands of a few, who will then have incentives to maintain and develop extractive economic institutions for their benefit and use the resources they obtain to cement their hold on political power”. On the other hand, these “extractive” institutions create unconstrained power and a huge income inequality which directly increases the potential stakes of the political game. To sum up this analysis of the vicious and virtuous circles, it can be said that whenever we have inclusive institutions, a positive feedback loops will be created which will help these institutions to become more persistent. However, when we have extractive institutions, a negative feedback loops will always block and forestall progress. 

Another major point that needs to be discussed and that occupies four major chapters of the book -chapter 7, 8, 9 and 10- is the industrial revolution and its impact on economic growth. The English Revolution or what can be called the Industrial Revolution of the English economy has played a major role in the birth of creative destruction which encouraged commerce as well as economic openness and success which led to prosperity. This industrialization reached different parts of the world such as United States and Australia which are considered major power nowadays. In contrast, the authors mentioned the opposition of the Ottoman Empire and other absolutist regimes to this industrialization which explains the literacy, lack of development and economic stagnation that these regimes suffered from at that time as a result of their opposition.

I believe that this book is a top-drawer and that it will definitely serve as an appropriate and useful material to the study of international relations theories since all the issues mentioned in it are still and will always remain part of our international system. I assume that the authors did a great job in answering the question around which the book evolves and they have cohesively analyzed and clarified their argument which made it easy to follow and understand. However, I believe that the book has limitations as well. I think that the biggest flaw of the book is when the authors did not give enough explanation on how to prevent the emergence of institutions that block development and cause poverty in nations and how to adopt institutions that will make the world prosperous. Another major flaw is when the authors forgot to site some of the limitations of inclusive institutions and the fact that growth cannot always be sustained - a major example is the global financial crisis in 2008 which affected major powers. In addition to that I believe that there is a lack of academic accuracy in supporting the events, theories, arguments, and manifestations that were provided by the authors.

To conclude, I recommend this book especially to international relations’ students as well as any general reader since it is easy to read and the language used is not really complicated. The clarity and brevity of writing made it easy to follow up with the argument and to understand what the authors intend to share and express. This book will change the way we understand and see the world, it an objective book that provides a good overview on the synergetic relationship between political and economic institutions and their relations with prosperity using a mix of historical facts, economics and political science. I will definitely use each and every section and chapter of this book since the field I am studying requires the understanding and the use of such a book on a daily basis.