Why Do The Nations Fail

Why do some nations prosper while others suffer?

What causes famine, poverty, and inequality? Why do some countries become wealthy while others remain poor? Why are some nations thriving while others are crumbling under the weight of political institutions? How can we prevent these problems? The answer is found in Why Nations Fail, by Adam Grant. The book's central argument is that political institutions are what cause states to fail. While the reasons for this are varied and complex, this book highlights a few key themes.

Inclusion of institutions

The first part of the book, Why Nations Fail, explains why some countries perform better than others. Acemoglu and Robinson use the example of the United States as a success story, illustrating how the country has embraced diversity in its political and economic institutions. This nation has free elections, world-renowned universities, and has been a beacon of freedom and tolerance for immigrants and new ideas. As the authors explain, the United States has a lot of institutions, and its political system has run a helluva race.

Extractive institutions

In many nations, extractive institutions have prevented their people from creating a more innovative, productive society. These institutions have a high poverty index and limited economic opportunity for the general population. They also discourage people from taking economic initiatives, because they know they will get very little from them. As a result, they create a situation where innovation is discouraged and the country will not achieve long-term economic growth. Consequently, this is the reason why many nations are struggling economically.

Corruption

Many of the problems associated with corruption are related to bribery. Bribery is the theft of government resources, including tax revenues. Officials often use this method to enrich themselves. They may use tax money to pay for "ghost" workers and extend loans to themselves. Corruption also undermines the public service ethos, and makes meaningful reforms nearly impossible. But how does corruption affect citizens? The report highlights some common causes.

Rent-seeking

The concept of rent-seeking has been around for centuries, but a new study has challenged this theory. It suggests that governments and businesses can make their profits at the expense of their citizens. These organizations are often inefficient, and the social costs of rent-seeking are overwhelmingly negative. Yet these same companies are often the reason that nations fail. In this article, we'll discuss the impact of rent-seeking, and how we can stop it.

Violence

"Why Nations Fail" aims to understand why some nations succeed while others fail. In examining the reasons for economic inequality, the book shows that this is often caused by the decisions of political power. Some say it's because of geography, culture, or lack of knowledge, but the fact is that nations like Botswana have the fastest-growing economies and are still plagued by violence. In contrast, countries like Sierra Leone and the Democratic Republic of Congo are trapped in a vicious cycle of poverty and violence.