It is mandatory to submit an 7-10 page (double spaced) summary andReview: critical review of Acemoglu and Robinson’s book Why Nations Fail.When evaluating Acemoglu and Robinson’s analysis and conclusions, justsaying “I disagree” without a reasoned argument is opinion and will beconsidered piffle. The book review is worth 25% of your final grade.An enduring conundrum of our time is why so few countries areprosperous. There has been much progress; the World Bank has stoppedcategorizing countries as ‘developed’ or developing’ and rather usesregional classifications instead. Are we witnessing the end of poverty?Of the 200 countries that produce economic data, only about 50 areclassified as high income. The World Bank estimates that of the 101countries that were classified as middle-income in the 1960s, just 13(Equatorial Guinea, Greece, Hong Kong, Ireland, Israel, Japan, Mauritius,Portugal, Puerto Rico, Singapore, South Korea, Spain and Taiwan) hadbecome prosperous by 2008.The answer to why only 13 countries have become rich in the past half-century should include an analysis of the types of institutions thatunderpin their economies. Possessing good institutions is what economistsfocus on after standard economic factors – which consisted of examininginputs like capital, labor (including human capital that accounts foreducation and skills) and technological progress specified in neoclassicalgrowth models. This new institutional economics bought in politics,sociology and history in order to understand why some countries succeedand other fail. This approach has been taken by Acemoglu and Robinsonin their book Why Nations Fail published in 2012.In their book Acemoglu and Robinson describe the institutional dynamicsthat determined which countries took advantage of nineteenth andtwentieth century opportunities and which countries failed to do so.Today’s inequality has its roots in this divergence. Those countries thatdeveloped inclusive economic institutions embarked on the process of industrialization and technological change and are today’s rich countries;those that did not are poor countries. (Acemoglu and Robinson (2012):Why Nations Fail, pp. 301)“Inclusive economic institutions … are those that allow and encourageparticipation by the great mass of people in economic activities thatmake best use of their talents and skills and that enable individuals tomake the choices they wish. To be inclusive, economic institutionsmust feature secure private property, an unbiased system of law, and a provision of public services that provides a level playing field in whichpeople can exchange and contract; it also must permit the entry of newbusinesses and allow people to choose their careers.” (Acemoglu andRobinson (2012): Why Nations Fail, pp. 74-75)“Nations fail today because their extractive economic institutions donot create the incentives needed for people to save, invest, andinnovate. Extractive political institutions support these economicinstitutions by cementing the power of those who benefit from theextraction. Extractive economic and political institutions, though theirdetails vary under different circumstances, are always at the root ofthis failure.” (Acemoglu and Robinson (2012): Why Nations Fail, pp.372)For countries tackling reform the power of vested interests in keepinginstitutions unchanged must be considered as well as the efficiency of theproposed measures. Every nation has its own history and institutions tograpple with, understanding the institutional impediments to growth candetermine policy success or failure. Simply transplanting a well-crafted setof rules, policies or even an entire legal system into a developing countydoesn’t work. Laws that are imposed artificially rather than developorganically do not necessarily fit. Economics doesn’t have all the solutionsbut looking more broadly at institutions holds the promise that we maylearn why some nations are rich and others are poor, and, mostimportantly, why some nations fail and why some ultimately prosper.In response to people’s anxieties regarding technological change andemployment, and increasing inequality, populist parties on both the rightand left are fanning people’s fear by encouraging hostility to immigrants,xenophobia, and distrust of free trade. The combination of the rise ofpopularism and the rise of identity politics is poisonous: identity politicsencourages people to confuse criticism of their arguments with criticism oftheir person, and popularism encourages them to trample over the rights ofminorities
Today there is broad contempt for elementary economic mechanisms andinstitutions. Politicians hesitate to defend inclusive economic institutionsor adopt unpopular policies because they fear an electoral backlash.Acemoglu and Robinson (2019) argue that political and economicinstitutions are an important determinant of economic success.Some questions you might want to address in your review are:• What is the distinction between inclusive and extractive economicinstitutions? What are the different types of economic incentives, andopportunity created by these institutions? What is creative destruction? What is the role of creative destruction?Do political and economic institutions underlie economic failure orsuccess?• What is the vicious circle? What is the role of government?• Are America’s days numbered? What challenges do globalization andtechnological change present? Are popularist movements in the U.S. achallenge?This website ( https://writingcenter.unc.edu/tips-and-tools/book-reviews/ )is a good resource for writing book reviews. I advise that you organizeyour book review using the format suggested by the post1. Introduction 1 page2. Summary of content about 2 to 3 pages3. Analysis and evaluation of the book about 4 to 5 pages4. Conclusion 1 pageIf you spend no more than a day or two writing your review it will read assuch. Grades on the review paper are normally a direct reflection of youreffort. Do not believe the adage: “if you can’t dazzle them with brilliancethen baffle them with bullshit.” The grade for piffle is F.The book review must be turned in by 11 am on April 25