Book SummaryWhy Nations Fail, by Daron Acemoglu and James A. Robinson

1-Page Summary1-Page Book Summary of Why Nations Fail

Published in 2012, Why Nations Fail by economist Daron Acemoglu and political scientist James A. Robinson creates a theory to explain international inequality: why some nations “fail” and are poor, unstable, and have low standards of living, while others “succeed” and are wealthy, stable, and have high standards of living. The authors argue that successful nations have political and economic institutions that are “open,” or free, fair, and accessible to society at large. On the other hand, failing nations have political and economic institutions that are “exclusive,” or that exploit average citizens to benefit a few powerful elites.

In our guide, we’ll explore their theory of international inequality in four parts:

• Part 1: Flawed Theories of International Inequality explains existing theories on international inequality and why they don’t work.
• Part 2: Why Nations Succeed defines open institutions and explains how they help nations succeed.
• Part 3: Why Nations Fail defines exclusive institutions and explains how they cause nations to fail.
• Part 4: Why Nations Change (Or Stay the Same) outlines how exclusive institutions can become...

Why Nations Fail Summary Part 1: Flawed Theories of International Inequality

Acemoglu and Robinson begin by exploring discussions of international inequality, which aim to explain why some nations succeed while others fail. They use the following standards for success and failure:

• Successful nations are wealthy with high standards of living and relative economic and political stability.
• Failing nations are poor with low standards of living and a great deal of economic and political instability. A nation doesn’t have to collapse entirely to count as failing, but many failing nations do end up descending into chaos and anarchy.

(Shortform note: Some economists and activists argue for a definition of success that focuses less on wealth and more on health and happiness. They note that wealth and happiness don’t always correlate—nations like Bhutan and Costa Rica rank highly in terms of well-being and happiness despite not being exceptionally wealthy. As you read through the guide, consider how...

Why Nations Fail Summary Part 2: Why Nations Succeed

After explaining why existing theories on inequality are flawed, Acemoglu and Robinson then outline their own theory for why the two Koreas—and nations across the world—are unequal. They believe that to understand inequality, one must study a nation’s political and economic institutions:

• Political institutions determine how a nation creates the rules that citizens live under. They also determine who wields power in society and how they wield it. Examples of open political institutions include a system of free and fair elections, town halls, courts, and legislatures.
• Economic institutions are the laws and incentives that influence how people behave in the market for labor, goods, and services. They determine the processes that distribute resources. Examples of economic institutions include banks, the stock market, and patent laws.

Political institutions necessarily determine economic institutions, argue the authors. This is because political institutions determine how rules are made—including the rules that govern economic institutions.

(Shortform note: The relationship between political and economic institutions is the subject of a long-running debate. Some,...

Why Nations Fail Summary Part 3: Why Nations Fail

In addition to describing nations that succeed through openness, Acemoglu and Robinson also explore nations that “fail,” or that are poor and unstable with low quality of life. According to the authors, nations fail due to political and economic institutions that are “exclusive” rather than open. These exclusive institutions enrich and empower a select group of elites at the expense of the population at large. In Part 3 of our guide, we’ll explain Acemoglu and Robinson’s arguments on what makes institutions exclusive, why exclusive institutions cause nations to fail, and why many leaders create exclusive institutions.

(Shortform note: Some scholars suggest that authoritarian (and therefore exclusive) regimes will sometimes empower themselves by benefitting the population at large. Though these regimes still repress dissent, they may not fully meet Acemoglu and Robinson’s definition of “failing”: widespread poverty and low quality of life. From this perspective, exclusive leaders will [provide wealth, benefits, or quality of life improvements to the population at large to coerce them into...

Why Nations Fail Summary Part 4: Why Nations Change (Or Stay the Same)

After outlining how institutions can lead a nation to succeed or fail, Acemoglu and Robinson then explain why nations change—how exclusive nations can become open and how open nations can become exclusive. Part 4 of our guide will cover their explanations of how, when, and why this happens—and how, when, and why it doesn’t.

Why Nations Change

Acemoglu and Robinson suggest that there are two main ways that nations can fundamentally change their institutions:

1) Critical moments: Nations can change as a result of “critical moments,” or historical events that threaten economic and political upheaval. Such upheaval challenges a nation’s status quo and creates opportunities for the redistribution of wealth and power. Then, whoever gains wealth and power from this redistribution can use it to impact political and economic change. For example, the coronavirus pandemic is causing major political and economic upheaval and redistributing wealth and power—from the growth of anti-vaccination movements to “[the great...

Shortform Exercise: Measure Your Nation’s Openness

Consider the degree to which political and economic institutions in your nation are open or exclusive.

Do you feel like you have a voice in your nation’s government? Do you think your nation’s government respects limits on its own power? Explain your answer.