18th choice Mark Zuckerberg for his year of Books is Daron Acemoglu and James Robinson Why Nations Fail [19459003':MarkZuckerbergannéedelivres]. Take a ride through to learn why some nations are economic powers, why the other tank, and how the new theory of the authors can guess the future of the United States, China and the world.
Riddle me this: Why has Botswana, a landlocked country in southern Africa, became one of the most dynamic countries in the world, while other African countries - Zimbabwe, Congo and Sierra Leone among them - remain caught in a miasma of violence and poverty? You can chalk it up to the weather, as our friend Ibn Khaldun; you could call the lack of culture, or perhaps attributed to simple ignorance of good policy.
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And you'd be wrong on all counts.
Select the number 18 in the Mark Zuckerberg book club offers new factors in what defines success for a nation. Drawing on fifteen years of original research, Daron Acemoglu and James Robinson evoke examples of the Roman Empire, Mayan cities, medieval Venice, the Soviet Union, Latin America, England, Europe, Africa and the United States, as they develop a new theory of why some founding nations where others develop. The book illuminates what we can predict about China, how to move millions from poverty, and if the US's glory days are over. Read on for its basic principles.
Why Nations Fail explores why even today some nations are trapped in what appears to be a whirlwind immitigable poverty while others thrive - or at least appear on the road to prosperity. Acemoglu and Robinson believe that the political and economic institutions are the keys to long-term prosperity and expose exactly how they can be the key to breaking or perpetuating the nation's cycle.
Who wrote it?
Daron Acemoglu is professor of economics at MIT and is among the most respected economists in the world. He received the John Bates Clark Medal, which is considered the precursor of the Nobel Prize.
James A. Robinson is a political scientist, economist and professor at Harvard. He has done research in Latin America and Africa, and is widely regarded as an expert on foreign aid.
3 things you need to know from Why Nations Fail
1. "integrative institutions" are what provide evidence nations with sustainable economic success.
Nearly all countries that have achieved a high standard of living have what is called the integration institutions.
integrative institutions - political and economic institutions that involve all of society, are enabling broad democratic participation in politics and the economy. They are characterized by a range of individual rights, such as freedom to choose a profession and access to education. They establish incentives for education, performance and innovation, and to create a wider distribution of income, which prevents small elite groups to abuse their power and any potential benefit from unfair competition .
2. "extractive institutions" - authoritarian regimes, for example -. are the strength that prevails in the poorest countries
Historically, integration institutions are an exception to the rule. so-called "extractive" institutions of exploitation, are unfortunately the norm.
This institution is designed to benefit only a small elite whose priority is to maintain control over politics and the economy. Despite this common fundamental trait, the individual nature of extractive institutions varies from country to country. In North Korea, for example, citizens do not enjoy the right to property. In Congo, the institutions are yet in place the way they were in the days of colonialism :. A small elite banking on the country's resources and raw materials are sent out of the earliest countries and cheaply as possible 
3. The political change always means institutional change, which takes time.
If it is possible at all, institution swapping takes time. The authors explain that the beginnings of political change is usually difficult and the consequences tend to be unpredictable, since many countries are stuck in a vicious circle that is extremely difficult to break.
To cite a recent example, the fall of Hosni Mubarak may have been a step towards democracy in Egypt, but he also created the risk of a military regime operating the same kind of authoritarian institutions would fill the power vacuum. This is because many people are afraid of instability, a state of affairs that would be characteristic of a true democracy in its infancy.
And the fear and uncertainty? It is natural in these situations because it moves slowly and feels fragile. the functioning democracy can not happen overnight. Take France, for example, after the French Revolution ended in 1799, it took 80 years for a stable democracy to form! It is unrealistic to think that this kind of development could take place in a few years in countries like Egypt, but the possibility is not off the table.
An interesting concept Why Nations Fail:
Foreign aid should be targeted on institutional reforms, not to support authoritarian systems. Here's an example: in Afghanistan, billions of foreign aid dollars were wasted because they were made in bad projects. After the fall of the Taliban in 2001, Afghanistan had the opportunity to establish a democracy. But not much money it received in foreign aid has been used for reconstruction -. Much of it flowed away in administrative cases
A surprising idea from the Nations Fail Why:
Authoritarian systems fail because they do not create the right kind of incentives. But the free market will. In a free market, incentive systems have a slight increase in innovation and efficiency possible. In authoritarian systems, however, sustainable technological change and increased productivity are generally not at the forefront. In these systems, the incentives for innovation and efficiency increases are generally defined centrally, which rarely lead to satisfactory results.
authoritarian institutions also frequently fall prey to the complexity of their own plans.
Under the reign of Stalin, for example, often Soviet workers received a third of their salary bonus when certain production quotas were met. However, what prevented innovation. Why? Because innovation involves short-term loss of productivity - even if the loss that ends up creating a long-term increase in productivity. Because of the rule of the premium plan, workers were mainly on work for their bonus money rather than working on new innovations.
If you only remember one thing, make it this:
rich and poor countries differ, particularly in their political and economic institutions. In rich countries there are institutions of integration (ie, democratic institutions that involve the whole society), while in poor countries there extractive institutions (institutions namely, authoritarian and operations that strengthen the power of an elite class).
Read more Why Nations Fail in its entirety, or read the book highlights in a 10-minute summary on Blinkist - free
➤ This post originally appeared on page 19
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