By Daron Acemoglu and James A. Robinson

“Why Nations Fail: The Origins of Power, Prosperity, and Poverty” by Daron Acemoglu and James A. Robinson explores a fundamental question: Why do some nations flourish while others stagnate or collapse? The book argues that the key to understanding this disparity lies in the differences between inclusive and extractive institutions. This argument challenges the conventional wisdom that geography, culture, or ignorance are the primary determinants of a nation’s success. By delving into the historical and political roots of economic inequality, Acemoglu and Robinson provide a compelling narrative that reshapes our understanding of global prosperity and poverty.

The central thesis of “Why Nations Fail” revolves around the idea that the political and economic institutions within a nation are the primary drivers of its prosperity or poverty. The authors make a distinction between “inclusive institutions,” which promote economic freedom, innovation, and shared prosperity, and “extractive institutions,” which concentrate power and wealth in the hands of a few, stifling economic progress for the majority.

One memorable example illustrating the power of institutions is the comparison between North and South Korea. Despite sharing the same cultural and geographical background, the divergent paths of these two nations starkly highlight the impact of political institutions. North Korea’s extractive regime has led to widespread poverty, while South Korea’s inclusive institutions have driven its economic success.

Quote: “Inclusive economic institutions, which enforce property rights, create a level playing field, and encourage investments