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Blink 3 of 8 - The 5 AM Club
by Robin Sharma
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Why Nations Fail summary
The Origins of Power, Prosperity, and Poverty
29 mins
Brief summary
Why Nations Fail by Acemoglu and Robinson is an examination of the factors that contribute to the success or failure of nations. They argue that inclusive political and economic institutions lead to prosperity, while extractive institutions lead to poverty and failure.
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Why Nations Fail
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A country's propensity to wealth or poverty isn’t simply based on its geography, culture or knowledge base.
On the border shared by Mexico and the United States there lies a town that’s divided in half between the two nations. The residents of Nogales, Arizona have a much higher standard of living than those living south of the border in Nogales, Sonora. They have better access to healthcare and education, their crime rates are lower, and the average household income is three times higher.
What causes such differences? The geography hypothesis has been the most influential theory designed to explain such inequality – but that theory falls short here.
It was most famously espoused by the eighteenth-century French philosopher Montesquieu. He maintained that inhabitants of warmer, more tropical climates were lazier than the harder working, more resourceful types who lived in more temperate climes.
In modern times, the theory has morphed to emphasize the presence of diseases in warmer regions such as Africa, South Asia and Central America, as well as the supposed poor soil quality of those regions, which allegedly inhibits economic growth.
But it isn’t just Nogales that disproves such ideas. Just look at differences between South and North Korea, the former countries of East and West Germany, and the massive economic leaps made by Botswana, Malaysia and Singapore.
Two other classically cited theories don’t stand up either.
The first is the cultural hypothesis. In the early twentieth century, German sociologist Max Weber claimed that Western Europe's high rate of industrialization, in contrast to the rest of the world, had been caused by its “Protestant work ethic.”
But just look at Korea, a peninsula that was culturally homogenous until the split between communist North and capitalist South. The cultural hypothesis simply cannot explain the differences in inequality between the two. It’s the existence of the border that has caused such disparities, rather than deep and significant cultural differences.
The ignorance hypothesis operates in a similar field as the cultural hypothesis. It suggests that poverty results from a dearth of knowledge regarding policies that might encourage economic growth.
The counter example here is obvious: foreign aid and expert advice brought to countries in Africa have largely failed to make a lasting difference.
However, there is a more compelling theory that explains international inequality. Let’s look at it now.
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What is Why Nations Fail about?
Why Nations Fail revolves around the question as to why even today some nations are trapped in a cycle of poverty while others prosper, or at least while others appear to be on their way to prosperity. The book focuses largely on political and economic institutions, as the authors believe these are key to long-term prosperity.
Why Nations Fail Review
Why Nations Fail (2012) dives into the historical and contemporary causes of economic and political success or failure in nations. Here's why this book is worth reading:
- Packed with insightful analysis, it sheds light on the impact of institutions on a nation's prosperity or decline.
- Backed by extensive research and numerous case studies, it presents a compelling argument for the crucial role of inclusive institutions in fostering economic development.
- The book's accessible writing style and captivating stories keep readers engaged, transforming a complex topic into an intriguing journey through history.
Best quote from Why Nations Fail
As institutions influence behavior and incentives in real life, they forge the success or failure of nations.
—Daron Acemoglu & James A. Robinson
Who should read Why Nations Fail?
- Anyone who is interested in world politics and foreign aid
- Anyone who wants to find out why some countries are poor while others prosper
- Anyone who has thought about how we can tackle inequality in the world
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Why Nations Fail FAQs
What is the main message of Why Nations Fail?
The main message of Why Nations Fail is that political and economic institutions shape the fate of nations.
How long does it take to read Why Nations Fail?
The estimated reading time for Why Nations Fail varies, but you can read the Blinkist summary in just a few minutes.
Is Why Nations Fail a good book? Is it worth reading?
Why Nations Fail is definitely worth reading. It provides a compelling analysis of the factors that determine the success or failure of nations.
Who is the author of Why Nations Fail?
The authors of Why Nations Fail are Daron Acemoglu and James A. Robinson.
What to read after Why Nations Fail?
If you're wondering what to read next after Why Nations Fail, here are some recommendations we suggest:
- The Prince by Niccolò Machiavelli
- The Social Contract by Jean-Jacques Rousseau
- Women Who Run with the Wolves by Clarissa Pinkola Estés
- Principles For Dealing With the Changing World Order by Ray Dalio
- Sapiens by Yuval Noah Harari
- Guns, Germs and Steel by Jared Diamond
- The Shortest History of Economics by Andrew Leigh
- A Brief History of Time by Stephen Hawking
- Why We Sleep by Matthew Walker
- House of Huawei by Eva Dou