Why Nations Fail

A thorough investigation into a descriptive theory concerning the nation state and its endurance.

Not sure I can give this a thorough review though, since this really is a thesis concerning a non-trivial social theory, much of which I am not qualified to comment on or well read enough in this field to identify deficiencies in arguments.

Seemingly though, the text answers many concerns fired at other theories in this field quite well, and the authors give ample case studies (sometimes too many) to shore up their theory. If you're interested in a bit of social theory history, this book is actually laid out quite nice to give you context there, even if you skim over the model aspect of the work.

The final two or so chapters state, again at length, how and where to apply their theory, and why specific predictions are nonsensical, although some relative trending is most likely possible in their context.

With that being said, I found perhaps two things that were unsatisfactorily answered or discussed:
- Is there a strong causality between inclusiveness and success? The authors generally state that extractive societies may see growth (e.g. China), but only temporarily, then decline unless institutions change. The flip side is not discussed: failed states with inclusive and functional institutions. Is this because the authors do not see relevant examples of these states or is this an omission?
- How does the friction at the state level interact with sub-cultures of the nation? There are some points considered here: comparing the power structure of Botswana and Sierra Leone is helpful. I'd be interested to know though, how lag/lead time on institutions shape culture. Do the authors think that US slavery (ended 1865) & segregation acts (ended 1960s) still shape the endemic issues of the black communities in that country?

Thesis: institutions (extractive vs inclusive) are what cause countries to fail or succeed in the long run.

A thorough book on an important question. It may not get everything right (I wouldn’t know), but seems to form a solid foundation for further progress in foreign policy.

Likes:

- Directly answers the common question, “Why are so many places able to observe policies of successful countries, but unable to emulate them?” By comparing the differences between Nogales, Arizona and Nogales, Sonora (directly across the border), the book discusses the contrast between the political and economic institutions of the U.S. and Mexico. Then zooms out to look at the differences between North and South America, showing that concentrated power creates a negative feedback loop (extractive institution) which prevents progress, even when corrupt leaders are overthrown. They also compare the Koreas.

- Dismisses the geography hypothesis by providing research that tropical medicine and agricultural science are not major factors in prosperity. Once institutions are properly established, there's no evidence that geographic factors have a significant impact on a nation’s well-being. The author of Guns, Germs, and Steel, who is an advocate for the geography hypothesis, even reviewed this book saying "Should be required reading for politicians and anyone concerned with economic development."

- States that natural resources are entirely dependent on a country’s institutions to determine whether they will be positive or negative. Diamonds cause major issues in Angola and Sierra Leone, but benefit Botswana. Russia and Saudi Arabia have experienced a rising GDP because of high natural resource prices, but that growth won't bring democratization.

- Spotlights Uzbekistan’s child labor, which has supposedly improved since the book's publication.

- Emphasizes that growth can still occur in extractive economies. The Soviet Union, Roman empire, and modern China, for example. China is discussed in depth, and remains to be determined.

- The proposed solution: to shift extractive institutions toward more inclusive institutions. "Either some preexisting inclusive elements in institutions, or the presence of broad coalitions leading the fight against the existing regime, or just the contingent nature of history can break vicious circles."

Dislikes:

- They don’t steelman other hypotheses (culture, religion, work ethic, disease, plants and animals, terrain, weather) much for comparison against their claim. They acknowledge geography and disease as influences, but not major factors in institutional development. The reader needs to do their own comparisons.

- The last chapter has many interesting claims about foreign aid, but doesn’t provide much for concrete advice on how to proceed. The best I found was "Perhaps structuring foreign aid so that its use and administration bring groups and leaders otherwise excluded from power into the decision making process, and empowering a broad segment of population might be a better prospect."

The book does not look coherent; it is as if it was a louse collection of anecdotal stories, interleaved with some thoughts on ill-defined concepts introduced by its authors. The anecdotal stories seem to be selected by a cherry-picking, leaving an impression of cognitive bias; and every conclusion is unfalsifiable even considering its informality (e.g. if the country with "extractive institutions" is still growing, that must be because it is wrong type of growth, which will soon end; and if the country with "inclusive institutions" has failed, that must be because there were some external problems; and it does not matter that in some of the "extractive" countries growth has persisted for much longer than in some of the "inclusive" countries).

I would recommend everyone interested in this topic to read Fukuyama's "The Origins of Political Order" and "Political Order and Political Decay" instead. It touches upon the very same problem; yet does it in much more logical and consistent way. And three pillars by Fukuyama (strong state, rule of law, and accountability) are much clearer than not-really-defined "inclusive political institutions" and "inclusive economic institutions" by Acemoglu; one could notice that Acemoglu sometimes even violates its own model and actually talks about Fukuyama's pillars, without mentioning these by name!