Why Nations Fail With The Nogales Case Study

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Summary:
Acemoglu and Robinson open chapter 1 of Why Nations Fail with the Nogales illustration. Nogales, Arizona and Nogales, Sonora are, for all intents and purposes, identical in every way save what institutions they are governed by. A fence splits two geographically similar ares and what was, until relatively recently, historically identical locals. Many of the same people still inhabit their respective side of the line. The 38th parallel presents and even starker divide than the Nogales illustration does, both of which are meant to rule out all other possibilities for their disparate wealth except one: institutions — specifically economics institutions as they are influenced by political institutions.
Acemoglu and Robinson take a slightly different approach in looking at the question of why are some nations so rich and some so poor? Their plan is to examine why nations have not succeeded in harvesting long-term growth. They begin their argument by addressing the three predominant theories of the differing economic levels of nations. A more traditional geography hypothesis, blames topical diseases and the unproductiveness of tropical agriculture for the stunted growth around the tropics. Diamond’s geography hypothesis, however
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Any potential businessperson who fears the government will either expropriate, tax away or be unable to protect their property from being stolen, will have little incentive to work beyond what is required — these conditions perpetuate economic stagnation. The degree to which an institution is economically inclusive will influence both technology and education. Given the freedom and social mobility to chose one’s own job tends to lead to people working in sectors where their talents/human capital will be best utilized — this paired with property rights facilitates and incentivizes technological innovation, which is an essential part of growing into a prosperous

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