Friday, July 6, 2012

Why Nations Fail by Daron Acemoglu- Book Review

Recipe for Success!

We tend to believe that the People and the Land make up the Nation - and hence the ability of the people and the quality of the land whether it is the geography or the availability of natural resources that determines whether a Nation will succeed or fail. But in this well researched book the authors show that it is the nature of the political and economic institutions which a nation creates that determines success or failure.

Authoritarian political institutions and extractive economics institutions are recipes for failure. But why do some countries or even adjacent cities develop them while their neighbors get democracy and inclusive economic institutions? Small initial differences going back hundreds of years which divert nations in different directions, contingent events, calamities, great personalities all explain the destinies of nations.

Covering countries from the West and the East, from Africa to Indonesia, from Australia to Antartica, the authors have a done a great job covering history, politics and economics and providing such insights that the book is a pleasure to read. There have never been a doubt that with free markets and equal opportunity, people from all backgrounds and nationalities can do well. For many decades we have seen immigrants from the world over get to the shores of the United States and do exceedingly well. But it had been difficult to understand why America developed they way it did while neighboring Mexico went down the other way. Or countries like China and India with ancient civilizations and colorful histories ended up being poor nations with millions on impoverished people. And why are they able to now rise back? And which model will succeed? Read the book to find out - you will not regret the effort.

I wish they can make this a compulsory read for all politicians......

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