WHY NATIONS FAIL: The Origin of Power, Prosperity and Poverty

A Book Review
Submitted to
Professor Oding L. Ma-amor
Faculty at Graduate School
Mindanao State University
Marawi City

In Partial Fulfillment
Of the Requirements for the Course
PA 202 (Public Ethics and Accountability)

Najimah H. Domara-ag

July 2021
 Why Nations Fail the origin of power, prosperity and poverty was first published in 2012,

it is a non-fiction book by Turkish-born Armenian-American economist David Acemuglo from

the Massachusetts Institution of Technology and British political scientist James A. Robinson

from the University of Chicago. The book applies insights from Institutional Economics,

Development Economics and Economics History to understand why nations develop differently.

First the things I like about this book is that it’s like a masterpiece. What I like most was quote

and quote “Poor countries are poor because those who have power make choices that create

poverty”, also “ NATIONS FAIL TODAY because their extractive economic institutions do not

create the incentives needed for people to save, invest, and innovate. Extractive political

institutions support these economic institutions by cementing the power of those who benefit

from the extraction.” Which I believe is fact. Most people believe that knowledge is power but

from what I think Power is Power. Those who are in position and in a great power to control and

make things easier for them are the ones who make the lives of the many miserable. I don’t

believe that giving money to the poor makes them less poor, you just make them beg for more,

and that prevent them to make decisions such as investing for good and be creative. Also this

book is very informative by giving examples on the existing inequality and poverty in the world

by taking us through the past of each example. The Authors created a very interesting book

which explains a lot of important economics concepts.

What I less like about the book is that it is very long like the last five chapters were a bit

drag and repetitive I think they could at least summarize those parts in one. It took me more time

to understand and it needs a lot of comprehension for you to get it (at least for me). As seen in

the book the degree of economic inequality in the world today is truly staggering. The nominal

GDP per capita of the richest country in the world which is Luxembourg is many hundreds of
times greater than the poorest which is the Democratic Republic of Congo. Acemuglo and

Robinson prepare many arguments through their book as to why this is the case. One such

argument is that variation in institutions between societies is the key to explain the differences in

national wealth in the modern world, however the idea that institutions are the caused is

contrasted with other theories this theories include geographical or ecological factors such as

parasite load or antiquity of agriculture. Another such idea has do to with cultural factors such as

work ethic lack of knowledge about the best course of action which is labeled as the ignorance

hypothesis. Some of the greatest issues facing us today brought up by the book are issues

income, inequality and political stability, they are some of the most important practical issues

facing us today as well as directly affecting the lives of people in affected countries. In our

increasingly globalized world, the problem created by state failure in one part of the world can

have far-reaching consequences. Any attempts to create more equitable world and raise standards

of living for everyone will rely on us understanding the causes of inequality and as the subtitle of

the book puts it, the origins of power, prosperity and poverty. For Acemuglo and Robinson,

Economic Institutions provide the i=engine of economic growth by enabling individuals to trade

and starts businesses easily and by creating incentives for them to commit to long-term

investment to develop and take up new technologies and improve their skills and knowledge

through education. The effectiveness of these economic institutions is determined by political

institutions and the factors that govern how political power is spread across members of a

society. Acemuglo and Robinson classify political and economic institutions as being either

inclusive or extractive. Inclusive Economic Institutions are those that enable and encourage the

majority of the population to participate freely and securely in economic activities that suit them,

such institutions remove barriers to entry for new ideas and businesses and facilitate a level
economic playing field. These inclusive economic institutions are supported and made possible

by inclusive political institutions. In these institutions political power is not concentrated solely

in a limited number of individuals but is spread more broadly. Extractive Institutions on the other

hand are those that are designed to benefit a few privileged elites even though any wealth

generated is based on the hard work of the majority of the population.

Throughout the book Acemuglo and Robinson stress historical contingency and path

dependence societies either develop or do not develop inclusive institutions because of the

institutions they already possess and the particular historical circumstances they find themselves

in. This can be seen in the countries of North and South America their differences can be

explained by the differences in early colonial practices. These policies and institutions were

forged as a result of the different forms socio-political organizations and resources of the native

societies the earl colonists encountered. Acemuglo and Robinson present a large amount of

information throughout from throughout history, they clearly lay out a hypothesis about why

some nations fail and some succeed in this book. I would highly recommend this book to anyone

as it shows the benefits of economic growth and political stability for everyone.