why nations fail: the origins of power, prosperity and poverty
TRANSCRIPT
WHY NATIONS FAIL: The Origins Of Power, Prosperity and Poverty Daron Acemoglu & James A. Robinson
Presentation by: Mahvish ShafiqueRoll # 04
Sequence of presentation
Introduction of Authors Introduction of book Chapter wise Summary Thesis of Authors Analysis Relevance of the book with Pakistan Conclusion
Authors Daron Acemoglu
Turkish Born American Economist Professor of Economics at MIT
James A. Robinson An Economist Political Scientist Professor at Harvard University
Introduction of the Book
Title: WHY NATIONS FAIL Authors: DARON ACEMOGLU AND JAMES A. ROBINSON Language: English Subject: Comparative Politics Genre: Non-Fiction Publisher: Crown Business, New York. Place of Publication: United States of America Date of Publication: March 20, 2012.
Chapter 1: So Close And Yet So Different Comparison of two sides of Nogales city
American side of Nogales Mexican side of Nogales
Reason of Difference Difference in political and economic institutions Historical development of institutions
Chapter 2: Theories That Don’t Work
The geography hypothesis People in tropical areas tend to be lazy
The culture hypothesis Religion, beliefs, values and ethics determine the fate of the nation
The ignorance hypothesis Rulers do not know how to make poor countries rich
All three hypothesis are flawed
Chapter 3: The Making of Prosperity and Poverty North Korea vs South Korea Inclusive Political Institutions
Centralised and pluralistic Extractive political institutions
Narrow, absolutist and uncostrained Inclusive political institutions give birth to inclusive economic
institutions Extractive political institutions give birth to extractive economic
institutions
Chapter 4: Small Differences and Critical Junctures: The weight of History History and critical junctures shape the path of political and economic
trajectory
Why some nations make the transition to inclusive economic and political institutions
while others do not
Chapter 5: Growth under Extractive Institutions Growth can take place under extractive institutions
Sustainable growth needs technological changes
Growth under extractive institutions will not be sustainable
Chapter 6: Drifting Apart
Inclusive institutions can be reversed
Example of Venice
Political and economic institutions were overthrown
Prosperity was reversed
Today it is rich because people want to spend their money, admiring its past glory
Chapter:7 The Turning Point
Fear of creative distruction is a hindance in development
New technology renders old prectices obsolete
Resistence is shown by the victims of creative destruction
Industrial revolution in England
Chapter 8: Barriers to development
Opposition to new technology is barrier to development
Ottomans opposed printing press
Absolutist regimes blocked the spread of industry
Consequence; they lagged behind
Chapter 9: Reversing Development
European colonalism impoverished large parts of the world
Colonies did not benefit from industrialisation
Rather strengthened already extractive institutions
Chapter 10: The Diffusion of Prosperity
Some parts of the world took different parts to prosperity from that of Britain
Industrial Revolution of the English economy to the United States and Australian transformation
Chapter 11: The Virtous Cycle(1/2)
Dictatorship is not welcomed in inclusive political institutions
Inclusive political institutions support and are supported by inclusive economic institutions
Removes extractive economic relations
Slavery and serfdom
Chapter 11: The Virtous Cycle(2/2)
Reduces the importance of monopolies
create a dynamic economy
Reduce the economic benefits that one can secure by using political power.
Allow a free media to flourish
Chapter 12: The Vicious Cycle
Extractive political institutions lead to extractive economic institutions
Enrich a few at the expense of many
Create the platform for extractive political institutions to persist
Provide no checks against abuses of power
Creation of unconstrained power and great income
Inequality increases the potential stakes of the political game
Chapter 13: Why Nations Fail Today
Institutions, Institutions, Institutions
Extractive economic institutions do not create incentives
Extractive political institutions support economic institutions
Extractive economic and political institutions are root of failure
Chapter 14: Breaking the Mold
Vicious circle and extractive institutions can be replaced by inclusive institutions
Examples of China, Botswana and the U.S
Glorious Revolution in England
Chapter 15: understanding prosperity and Poverty Explains huge differences in living standards around the world
Differences in living standards are a result of distinction between extractive and inclusive economic and political institutions
Growth in extractive economic and political institutions is possible, but it is not sustainable
Thesis of the Authors (1/2)
Economic prosperity depends upon institutions Political institutions Economic institutions
Further divided into two categories Inclusive political and economic institutions Extractive political and economic institutions
Thesis of the Authors (2/2)
Virtuous circle strengthens inclusive institutions
Viciuous circle strengthens extractive instututions
Analysis
Not purely economic theory General reader can understand it Explains huge swathes of human history Use of multiple historical examples to show institutional developments Balance between the logic of political and economic behavior Use of maps and pattern Structurally well written book
Shortcomings(1/2)
Fails to tell how nations can prevent the build-up of institutions that cause poverty
Does not ponder upon the reasons of emergence of inclusive and extractive institutions
Ignores the role geography, culture and ignorance have to play in a Nation’s failure or success.
Shortcomings(2/2)
Growth cannot also sustain even under inclusive institutions. global financial meltdown of 2008
Goes too far back in time in citing examples, reducing its relevance in current world situations
Use of too many historical examples makes the reading a little boring
Relevance to Pakistan(1/2)
Extractive political institutions in Pakistan
Monopoly of civil and military elite on politics
Elections stregthen position of narrow elite
Feudal lords use political institutions for their own benefit
Relevance to Pakistan(2/2)
Foreign aid induced development benefits the rich
Huge inflow during military dictatorship was not helpful
Causes dependence on other countries