Why Nations Fail Analysis

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The fact is that we live in a world today that is vastly unequal. These disparities between nations began to see significant growth at the beginning of the 18th century, and have continued to escalate ever since. The authors, Acemoglu and Robinson, in, Why Nations Fail, acknowledge three widely accepted theories for inequality between nations: Geography, Cultural, and Ignorance hypotheses. However, they argue that these theories “just don’t work,” and fail to explain what really goes on within country boarders. The first theory, the geography hypothesis, claims “that the great divide between rich and poor countries is created by geographical differences,” where poor counties lie between the tropics of Cancer and Capricorn, and “rich nations,” …show more content…
While these locations also have arid soil that makes agricultural production difficult, it cannot fully explain the inequality present. The authors argue with the example of Nogales, which resides half in Arizona, and the other in Mexico. The town shares the same climate and physical topography, but the standard of living is exponentially higher on the U.S. side, as opposed to the Mexico half. And take North and South Korea as an example too. Both nations share the same peninsula of land, but South Korea has more prevalent economic prosperity than North Korea ever has. So, if economic flourishment is not due to geography, then what is it? The authors debunk this theory with the claim that prosperity is largely a result of “the way nations (such as the United States and Canada) are colonized” and “the uneven dissemination and adoption of technologies” (Acemoglu & Robinson 50-53). Those civilizations who are willing to adopt these technologies, …show more content…
It “asserts that world inequality exists because we or our rulers do not know how to make poor countries rich” (Acemoglu & Robinson 63). Poor countries are stuck in an abyss of market failures while richer countries have established improved policies that avoid these kinds of failures. However, the authors see the situation differently. Take China for example. It was “one of the countries that made the switch from economic policies that caused poverty and starvation of millions to those encouraging economic growth” (Acemoglu & Robinson 67). These institutional setbacks lead detrimental for China, but the nation could rebound with a political revolution and economic reforms. These ultimately created incentives for laborers to work under and formed the first steps in eliminating communism. As the authors stress it was “politics” that determined this change, “not better advice or better understanding of how the economy worked” (Acemoglu & Robinson 68). It is important to understand that many of these institutional failures result from politics, which has much greater significance in explaining world inequality than geographical and cultural disparities, or even the ignorance of rulers. While we can analyze numbers, and pick apart market structures as economists, we cannot fail to overlook the impact that politics has on the flourishment of an economic system; in any location or one of which is made up of

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