Why Nations Fail is an enlightening book which offers plausible, although at times overly simplistic explanations for why some nations are more successful on an economical dimension than others. In short, the authors’ main thesis is that inclusive and pluralistic economic and political institutions lead to more economically prosperous societies, where wealth is more likely to be distributed widely rather than concentrated in the hands of an elite minority. The conditions for fostering such institutions have by chance developed in some regions of the world, leading to their comparative economic success (e.g., the UK, USA, Australia and Botswana). In other regions (such as Latin America and large swathes of Sub Saharan Africa), due to various factors (such as colonialism and climate), these conditions have not developed, leading to the formation and perpetuation of extractive institutions, which in turn lead to instability and lack of rule of law. Many insightful examples are given and analyzed closely by the authors to support their well-reasoned arguments. For me these theories are useful in better understanding the world around us today, however, they are by no means an absolute truth. For instance, I found the explanations for the end of Apartheid in South Africa and the end of slavery in the Americas insufficient and incomplete. There were several additional compelling economic and political factors which played a more nuanced role in the demise of both of these deplorable extractive institutions. Nevertheless, overall I would recommend Why Nations Fail to anyone looking for an easy-to-read, well written yet not overly academic book to understand the modern economic world order.
**On the subject of slavery in the Americas, the book, Capitalism and Slavery, by Eric Williams provides a much more comprehensive and thorough economic explanation for the demise of both the slave trade (abolished by Britain in 1807) and slavery (abolished in British colonies in 1834).
*** On Apartheid I would point out the influence of Cuba in defeating South Africa in the Border War (which led to the independence of Namibia in 1990) as a contributing political factor. There are also countless books about the economics of Apartheid that underscore the unsustainability of the Bantustan model of governance as well as South Africa’s push to be “self sufficient” due to its economic isolation caused by sanctions (despite the fact that the US and UK repeatedly evaded and undermined these efforts). (less)
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