The book "Why are some countries rich and others poor" is a recognized bestseller. It is read all over the world, teachers advise it to their students. What are the authors talking about in the book, and why does this information elicit such a positive response? Read about all this in the article below.
Brief introduction
The book “Why are some countries rich and others poor. The Origin of Power, Prosperity, and Poverty ”was written back in 2012. The authors were two neoinstitutionalists from America - D. Adzhemoglu and J. Robinson. The work is an analysis and a set of all previous studies. The book is based on a new institutional theory, based on which, the authors offer the reader new versions of the development of states in the economic and social plans. The book discusses in detail the factors on which economic growth and the possibility of accumulating money depend. A site was also created that revealed the meaning of the book in more detail. He was completely English-speaking, lasted until 2014.
Main ideas
Acemoglu and Robinson in their book argue that many researchers were wrong. They assumed that the development of a country's economy directly depends on its geographical location, climate, ethnic component, natural resources, and even on religion and culture. It must be admitted that it is precisely these factors that all are guided by. However, the authors of the work “Why are some countries rich and others poor” completely deny such allegations. They reinforce their thoughts with real examples. We consider an example of paired societies that follow completely different development paths, with almost the same geographic and national characteristics.
On what then, in the opinion of the authors of the book, does the economic development of the state depend? Daron Adzhemoglu claims that it is based on the nature of the country's political and economic institutions. The book provides an in-depth analysis of the development of economies of different countries. Various political institutions in different eras are examined and compared. The following countries came under a thorough analysis of specialists: Australia, Botswana, France, Mexico, the USA, Colombia, South Korea, China, the USSR, Uzbekistan, the Russian Empire, Turkey, the British Empire, Maya civilization, and the Roman Empire.
Two models of economic institutions
The book "Why are some countries rich and others poor" offers readers two main models of economic institutions: extractive and inclusive.
The extractive model assumes that a small number of people benefit fully from the country. This group of the elect isolates the rest of the citizens from the possibility of making a profit in economic relations. This model is characterized by the alienation of property or income in favor of a narrow group of people. Such a model can be built exclusively at an extractive political institution that will protect and safeguard a privileged group.
An inclusive model allows participation in the economic relations of a large part of the population. In such a state, the inviolability of private property is guaranteed at the legislative level. Of course, such models can only be built on the basis of inclusive political institutions.
Which model is more profitable?
James Robinson and his colleague come to the conclusion that both development models are effective, but in each of them the pace and dynamics of development are different. Economic growth is indeed possible with the extractive model, but it will be short-lived, and as a result of welfare they will achieve unity. Inclusive models are developing more quickly and efficiently. This is natural, because a state in which almost every member of it is engaged in legitimate profit-making is achieving economic prosperity much faster. In such a country there will be no place for poverty. Inclusive models are believed to enable states to better handle external and internal crisis situations, while extractive models can only exacerbate the situation.
This is also quite logical, because citizens who have a decent standard of living are more loyal to the government. They are ready and can bear the crisis, knowing that in the future everything will normalize. In the extractive model, citizens will believe that everything is only getting worse, and there is no way out of poverty. This can provoke rallies and discontent.
Long-term perspective
James Robinson believes that, despite the possibility of economic development of the extractive model, in the long run it is ineffective due to several factors. When people cannot benefit from their occupations or are forced to give up most of the state, the incentive to work disappears. Instead, negative incentives are formed that encourage some to commit crimes. In the extractive model, narrow groups of people hinder the development of technology and science, since the introduction of new technologies can shake their power and transfer the reins of power to other groups. Modernization, which is carried out under the conditions of an extractive model, is completely ineffective, since it has a catching-up character. An example is the resistance of the land aristocracy of advancing industrialization. In an inclusive model, the land aristocracy could try to prevent the process of industrialization, but it would not be possible because of the inability to overcome strong political institutions.
USSR example
The example of this country considers economic growth in an extractive model. Heavy industry developed exclusively from the resources of the village. At the same time, peasant farming was very disorganized and inefficient. In addition, the level of technological progress was much lower than in several European countries.
By the 1970s, the resources of the village were redirected to industry. However, this put the Soviet system at a standstill: the forced labor system no longer worked, the elite resisted change, and there were no economic incentives at all. To get out of this circle, the Soviet government had to abandon the extractive model of governance, but this would entail a fall in power. As a result, all this led to the collapse of the USSR.
Is a transition possible?
Books on economics argue that a transition from an extractive to an inclusive management model is possible. Moreover, it happened many times in history. It is quite difficult to classify any country strictly according to one or another model. Many countries are mixed models. The modern world is full of states that are close to one of the described models, but do not have its “pure” characteristics. It is important to note that development along an extractive or inclusive path is not predetermined by historical factors.
The authors of the book “Why are some countries rich and others poor” cite the example of “Glorious revolution”. It was she who became the starting point for the transition of the UK to an inclusive development model.
However, the history is known and reverse transitions. For example, the Republic of Venice. The government concentrated all power in its hands, blocking other citizens' access to the country's economic resources. This entailed many consequences, which ultimately led to the decline of the country.
Transition paths
Political and economic institutions can be transformed. But the process itself depends on many factors. An important role is played by the degree of extractiveness. The stronger the narrow group of people, the more power and opportunities concentrated in her hands, the less likely to switch to an inclusive model. Equally important is the existence of separate groups of people (preferably at the legislative level) who could at least nominally oppose the elite. Practical results would not have been achieved immediately, but the population would have felt that it is possible and necessary to resist. If the possibility of a transition had opened up, the people would not fail to take advantage of it. The third important factor is the creation of a large group united by common interests - a coalition that would represent the most diverse segments of the population.
After reading books on economics, one can understand that even if such attempts to change the system are made, they often lead to the same result. A group that fights against the elite subsequently becomes the same. This is a rather sad trend, which nevertheless takes place to be in a number of states.
The book ends with the fact that the authors offer alternative development forecasts based on the proposed models. In their opinion, states that do not have a stable political system (Haiti, Afghanistan) will not be able to achieve significant economic development. Countries that have managed to achieve some independence on a political level can claim weak and unsustainable economic development (Tanzania, Ethiopia, Burundi).
Reviews
Critics expressed a positive attitude towards the book. The depth of analysis, argumentation and specific examples were emphasized. Small negative reviews were based on the fact that too little attention was paid to geographical and ethnic factors. It was also noted that the authors practically did not affect the factor of influence on the development of states of such international organizations as the World Bank or the IMF.