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Why Nations Fail

July-August 2012

An imagined scene of a meeting between a Spanish expeditionary party and a group of indigenous South Americans.

An imagined scene of a meeting between a Spanish expeditionary party and a group of indigenous South Americans.

Image ©Bettmann/Corbis Images

In 1997, James Robinson and Daron Acemoglu were at an economics conference in Boston, listening as a presenter used historical data from the previous two decades to explain underdevelopment in Haiti. “We went for coffee, and remember saying to each other, ‘This is crazy!’” Robinson recalls. “‘Haiti is like it is because of a very deep-seated, historical process. You need to go back 200 years, not 20.’”

What Robinson refers to as the duo’s “opening salvo” came four years later, with the publication of their paper “The Colonial Origins of Comparative Development” in the American Economic Review. In addition to taking a longer view of economic development, the paper was a response to the work of UCLA geography professor Jared Diamond ’58, JF ’65, whose Pulitzer Prize-winning book, Guns, Germs, and Steel (1997), attributed the success of a state’s economic development—or lack thereof—to characteristics of its physical environment. “One of the impulses for that first paper was this ‘geography theory,’ which we found sort of preposterous,” says Robinson. This offered a challenge: If not geography, then what?

The short answer, as they note in their recent book, Why Nations Fail, is politics. Robinson, now Florence professor of government at Harvard, and Acemoglu, Killian professor of economics at MIT, argue that countries in which political institutions (constitutions, regulatory authority, legal systems, distribution of power) have a long history of being inclusive—thus incentivizing the development of strong economic institutions—are more likely to succeed.

One of Robinson’s favorite examples is the contrast between the present wealth of the United States and Canada and that of most of their southern neighbors. In the book, he and Acemoglu detail how the original Spanish conquistadors of Latin America succeeded in imposing their will on the native people, mining the lands for gold and silver, and setting up a system that would enrich only the colonial elite and the Spanish crown. The historical persistence of this same sort of extractive structure, they say—where the government violates property rights and concentrates wealth and power in a class of elites—continues to disadvantage much of the region.

The British, on the other hand, not only failed to impose their will on the native population in their North American colonies, but were also unable to enforce extractive policies on their own colonists. Their only option, they found, was to motivate settlement through incentives. The authors specifically note the experience of the Jamestown colony, where settlers were given land grants and offered political inclusion; the book highlights a General Assembly in 1619 that “effectively gave all adult men a say in the laws and institutions governing the colony.” It was, Robinson and Acemoglu write, a powerful precedent: “Ultimately the good economic institutions of the United States resulted from the political institutions that gradually emerged after 1619.”

That, they say, is the difference: countries like the United States have benefited from a history of inclusive institutions that have provided for economic prosperity; Latin America—like the Middle East and sub-Saharan Africa—has been damned by traditions of rulers seeking gratification at the cost of the majority.

Some have questioned the depth of their work, Robinson reports. At a recent speech at Britain’s Department for International Development, an audience member stood and accused Robinson of being “simplistic.” “In social science, simple frameworks are very powerful for organizing thinking,” he says. “I don’t think we deny that geography or culture can be important in some contexts, but we think that isn’t the big story—that isn’t what explains these big patterns. And so let’s focus on these big patterns, and here’s a way of thinking about them.” Besides, he says, their framework is based on more than a decade of academic work and dozens of academic papers: “So it is an abstraction, it is a simplification. But it is based on a lot of research.”

As for Jared Diamond, whose geography theory inspired the duo’s counterargument, he is thanked in the acknowledgments of Why Nations Fail. “He is a good friend of mine,” says Robinson, noting that the pair have since co-edited books and set up academic conferences together. “He and I have spent hours arguing about the evidence. We just disagree.”