The success and prosperity of a nation boils down to their institutions, legal fairness and political transparency. Most countries lack the sense of equality by having exclusionary policies designed to enrich the elites and exploit the poor majority, preventing technological innovation, but social tensions, the legacy form civil conflict, geography, corruption and policy failure, contribute to government weakness. Extractive economic institutions do not create incentives needed for people to save, Invest and innovate. 

Higher productivity promotes faster economic growth, and faster growth allows a nation to escape poverty.

Nobel prize-winning economist, Daron Acemoglu and James A. Robinson makes meticulous enquiry of the existing puzzle of economic, social and political inequality in the current world scenario. The authors make an attempt to address the fundamental problem of glaring income gaps and variation in the standards of living in various parts of the world and answers the puzzle embedded in the “institutions” which shape up the overall governance in terms of economic, social and political policies of a specific country.  The authors reveal how some nations have followed an institutional path which resulted in effective institutions that are able to render policies beneficial for the citizens. Their examples dissimilar in terms of socio-economic indicators and similar regionally and geographically, like Nogales, Arizone ( United States), and Nogales, Sonara ( Mexico) in chapter 1, North and South Korea in chapter 3. Linking history and the contemporary conditions authors highlight historical revolutionary turning points of a nation matter only when they succeed in altering the social structures fundamentally as happened in the case of England in 1688 and French Revolution in 1789. The recent revolution in Egypt overthrowing Hosni Mubarak, where earlier revolutions the Ottoman Empire and the end of British rule in 1952 failed to establish a new order leading to much familiar to absolutism by Mubarak’s rule.

A historical institutional exploration of success and failure stories according to the authors is instructive in providing answers and solutions to the existing dilemma of variation in prosperity and poverty.

Political economic institutions alone cannot provide the necessary structure for development, politics and political institutions also dictate the shaping of economic institution as is the case of United States since 1619.

The authors attempt to provide reasons for the world inequality in terms of geography, culture and ignorance of the rulers, resulting in poor policy choices citing examples of Asian and African economies of Malaysia, Singapore, Botswana and China. 

Why Nations Fail: The Origins of Power, Prosperity, and Poverty

By. Daron Acemoglu & James A. Robinson