Why Nations Fail Study Guide

Daron Acemoglu was born and raised in an Armenian family in Istanbul. He went on to study economics in England, receiving his PhD from the London School of Economics at the unusually young age of 25. He became an Assistant Professor of Economics at the Massachusetts Institute of Technology in 1993 and was granted the distinguished title of Institute Professor in 2019. He is affiliated with the National Bureau of Economic Research and has rejected offers for high-level economic policy jobs in the Turkish government. He also frequently comments on economic issues in the American, Turkish, and Armenian media; his policy analysis is notable for integrating both conservative and socialist economic principles. In general, his research focuses on poverty alleviation and technological change. His most influential work is the collaborative research he has conducted with James A. Robinson, an expert on institutions, democracy, and economic growth in sub-Saharan Africa and Latin America. Robinson earned his PhD in Economics at Yale University in 1993. He went on to teach in Harvard University’s Department of Government in 2004. In 2015, he moved to the University of Chicago, where he directs the Pearson Institute for the Study and Resolution of Global Conflicts. He has done field research in multiple countries, including Haiti, Sierra Leone, the Democratic Republic of the Congo, Chile, and South Africa. He also contributed to the World Bank’s 2017 World Development Report on Governance, advised the Swedish government on development policy between 2007 and 2010, and teaches summer courses every year at the University of the Andes in Bogotá, Colombia.

In Why Nations Fail, Daron Acemoglu and James Robinson suggest that a few historical events—or “critical junctures”—played outsized roles in shaping the long-term trajectory of global economic development. The most important of these events was the Industrial Revolution, which started in 18th century England and quickly spread around the world (although, the authors argue, only to countries that already had inclusive economic institutions). This period of rapid innovation and industrialization created a stark division between rich and poor countries—one that persists today. However, the authors emphasize that understanding why the Industrial Revolution took off where and when it did requires looking even deeper into history. For instance, England managed to innovate during the Industrial Revolution because the Glorious Revolution built its inclusive political and economic institutions a century earlier. In turn, the Glorious Revolution was also possible because of older historical events and institutional traditions, stretching all the way back to the Roman occupation of England between 43 and 410 AD. This principle applies all over the world: earlier historical events set the stage for institutional changes later on. To that end, European colonization and the slave trade were particularly impactful around the world: they help explain why inclusive and extractive institutions formed in different nations, and these institutions later determined how these nations responded to the Industrial Revolution.

Acemoglu and Robinson have collaborated on several books, but their most influential academic work is actually a paper entitled “The Colonial Origins of Comparative Development,” which they co-wrote with the economist Simon Johnson. This paper attempts to explain why European colonialism led to harmful, extractive institutions in some regions and effective, inclusive ones in others. The authors also cite hundreds of scholarly works in Why Nations Fail. Their arguments are influenced by Douglass North’s work, including Structure and Change in Economic History (1982), as well as books like Joel Mokyr’s The Lever of Riches: Technological Creativity and Economic Progress (1990) and Mansur C. Olson’s The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities (1984). They take issue with other studies of global inequality, like the geographical theories in Jared Diamond’s Guns, Germs and Steel: The Fates of Human Societies (1997). Immanuel Wallerstein’s landmark four-volume work The Modern World System (1974-2011) also played a major role in shaping the field—like Why Nations Fail, it looks to history for answers about why the world is structured the way it is today. Finally, numerous other scholars have provided different explanations for global inequality since Why Nations Fail was published in 2012. Thomas Piketty, for instance, is widely recognized for Capital in the Twenty-First Century (2017), and Nobel Prize laureates Abhijit Banerjee and Esther Duflo propose evidence-based policy solutions for poverty in Good Economics for Hard Times: Better Answers to Our Biggest Problems (2019).