Why Nations Fail – A Review

Why Nations Fail – by Daron Acemoglu and James Robinson

This is an interesting highly readable book offering hope that geography, culture and history do not necessarily condemn a country to poverty, that is they are not a destiny. At the same time it is a book that is refreshingly honest in its assessment that the process of getting out of poverty is not easy, requires hard work and even a bit of luck.

The main theory espoused in this book is Nations fail economically because of extractive institutions. These extractive political institutions have created extractive economic institutions that transfer wealth and power to a few elites. And in a vicious circle, these elites will do everything to ensure their economic power is not eroded thereby cementing their political power sometimes for centuries.

Inclusive political institutions are political institutions that are sufficiently centralized and pluralistic. When either of these conditions fails these institutions are extractive. Extractive economic institutions are designed to extract incomes and wealth from one subset of society to benefit a different subset. Inclusive economic institutions on the other hand ensure secure property rights, an unbiased system of laws, provision of public services that provide a level playing field in which people can exchange and contract and the ability of the people to change and choose their careers thereby encouraging people to engage in entrepreneurial activities that will spur growth and lift many out of poverty.

The solution to the economic and political failure of Nations today is to transform their extractive institutions towards inclusive institutions. It will take a lot of effort and time to achieve this because of the tendency of those benefiting from the status quo to do everything in their power to stop any change.

The book is a reminder of how fortunate one is to live in the 21st century. The level of atrocities men committed against each other a few decades and centuries ago is best left to the imagination. The world is still not perfect as you still have murderers terrorizing ordinary people like ISIS and Boko Haram and you still have extractive authoritarian regimes in countries like Zimbabwe, Congo, Colombia etc. but you get the feeling that one day they will kiss the dust. My hope is that it will be sooner rather than later.

The book also gave me hope that things can get better in Nigeria. For one, Nigeria is now a democracy, albeit one that is evolving. Secondly, our democracy has improved with the emergence of APC thus creating a real opposition. With a more organized opposition some of the impunity practiced by the government we have witnessed in the past will not be repeated in the future. This will hopefully lead to more inclusive political institutions, that will lead to more inclusive economic institutions and ultimately lift the majority of the people out of abject poverty, which will be sustained for the foreseeable future.

Another insight that I gleaned from this book, which is in hindsight intuitive, is the role diverse groups of people coming together play in forcing political institutions to change. Not in the mold of the French revolution but more in the mold of the Great revolution in Britain and most recently in Brazil (decades in the making – recent in historical context). The rise of the Brazil in the last three decades is a consequence of plural and diverse groups of people courageously coming together to fight for political empowerment and then building inclusive political institutions when they got the chance. The key is the diversity of the groups; their plural nature, meant the change could not be hijacked by vested interests.

I recommend this book to all those interested in lifting the majority of Nigerians out of poverty and those interested in Nigeria transforming into a true democratic, pluralistic and inclusive nation.

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