Migrating into Books, review
The review
The field of international development has gained prominence in light of global efforts to improve the living conditions of disadvantaged societies, and the approaches to addressing these challenges have evolved alongside technological advancements and the processes of globalization. However, the core of development remains centred on the same question: why do some nations manage to achieve prosperity and ensure security and equal opportunities, while others fail to meet even the basic needs of their citizens?
The book „Why Nations Fail”, written by Daron Acemoglu and James A. Robinson, Nobel laureates in Economic Sciences in 2024, represents one of the most influential contributions to formulating a coherent answer to this question.
Determinants of National Prosperity
Naturally, various theories have been formulated in the academic literature to explain the development gaps between nations. For instance, the geographical hypothesis posits that factors such as unfavourable climates, poor soils, or limited access to trade routes hinder agricultural productivity and constrain the conditions for economic development. The cultural hypothesis suggests that certain traditions, social norms, or religious influences may promote the emergence of prosperity. There is also the idea that development gaps arise because political and economic leaders in poor countries lack the knowledge to formulate effective policies, which the authors refer to as the “ignorance hypothesis”.
What are the Limitations of Classical Approaches?
Although the above hypotheses may serve as important factors in explaining development or the lack thereof, Acemoglu and Robinson empirically demonstrate why geography, culture, or the ignorance of leaders cannot serve as universally valid causes.
Despite having a common history, culture, and geography, North Korea and South Korea present diametrically opposed realities: in the North, the population is barely surviving, while in the South, citizens benefit from modern public services and extensive economic opportunities. Another case is that of the city of Nogales, divided between Arizona (USA) and Sonora (Mexico): on one side of the border, there is stability, prosperity, and functional institutions, while on the other side, Mexican citizens live in poverty and often attempt to cross the border. Latin America, despite being much richer in mineral and precious stone resources than North America, has experienced a marked economic decline, while the USA and Canada have become poles of prosperity.
In Europe, the gap between the West and the East illustrates that, although both regions had similar levels of development in the 14th century, their historical trajectories led to notable differences. African states continue to be trapped in a vicious cycle of political instability and extreme poverty, despite their abundant natural resources.
How Do Acemoglu and Robinson Explain Development Gaps?
The examples above challenge previous theories regarding the variation in development and suggest that the explanation for global inequalities lies beyond geography, culture, or the ignorance of leaders.
The answer provided by Acemoglu and Robinson involves a comprehensive demonstration, built on historical and economic analyses that go beyond simplistic explanations. The book not only rejects previous theories but also proposes a coherent framework through which the persistent causes of poverty and underdevelopment can be understood. In very simple terms, the authors explain development differences through the nature of political and economic institutions, inclusive or extractive, and their ability to foster sustainable growth or, conversely, stagnation and decline. Inclusive institutions are those that promote economic opportunities for all citizens, allowing broad participation in political and economic life, thereby stimulating innovation and sustainable growth.
On the other hand, extractive institutions concentrate power and resources in the hands of a small group, limiting access to opportunities and perpetuating inequalities, which leads to economic stagnation and decline.
We will not detail the entire argument of the authors here, as we encourage readers interested in understanding the dynamics of development and the factors that determine the success or failure of nations to read the book for themselves. The book’s exhaustive analysis explores the mechanisms by which institutions influence economic and social evolution, emphasizing the importance of historical context and power structures in shaping the path of a nation.
The theory advanced by Acemoglu and Robinson is not without limitations, as China is one example that challenges it through sustained economic growth despite extractive institutions. However, understanding this theory, along with other approaches, contributes to a multidimensional understanding of development in different temporal and geopolitical contexts.
Thus, „Why Nations Fail: The Origins of Power, Prosperity, and Poverty” is essential for completing the theoretical framework necessary for analysing global development, both for students and academics, as well as for practitioners in the field.