WHY
NATIONS
Power · Prosperity
Poverty
FAIL
James Robinson
WHY
NATIONS
Power · Prosperity
Poverty
FAIL
James Robinson
Scroll to Analyze
THE
THESIS
It's not geography.
It's not culture.
It's not ignorance.
It's institutions.
Inclusive Institutions
"Inclusive economic institutions... are those that allow and encourage participation by the great mass of people in economic activities that make best use of their talents and skills."
Extractive Institutions
"Extractive economic institutions are designed to extract incomes and wealth from one subset of society to benefit a different subset."
CASE STUDIES
Same geography. Same culture. Same people. Different institutions. Dramatically different outcomes.
Nogales, Arizona
GDP per capita: $30,000+ / year
Life expectancy: 79 years
High school graduation: 90%
Pluralistic Institutions / Market Economy
Nogales, Sonora
GDP per capita: $10,000 / year
Life expectancy: 72 years
High school graduation: 50%
Absolutist Regime / Controlled Economy
THE ENGINE
INPUT: Political Power + Economic Incentives
Political Power
20%>> ALERT: Power concentrated in the hands of a narrow elite. No checks and balances.
Economic System
20%>> ALERT: High entry barriers. Property rights insecure. Wealth extracted by elites.
DECAY
Outcome: Stagnation, poverty, political instability, civil unrest.
DECAY
Institutional Feedback
Extractive institutions concentrate power and wealth in elite hands
Elites block innovation and competition to protect their interests
Economy stagnates. Masses lose opportunity and hope.
Political discontent is suppressed. Institutions become more absolutist.
"Extractive institutions create a vicious circle. Elites have both the incentive and the resources to maintain them."
CREATIVE
DESTRUCTION
The engine of long-term economic growth
Economist Joseph Schumpeter called it "creative destruction"—the process where new technologies and firms replace the old. This is the engine of long-term growth.
But this process threatens the power and wealth of existing elites. Under extractive institutions, they block innovation to preserve their status.
SYSTEM STATUS
Extractive Institutions
OLD INDUSTRIES
Established / Resistant to Change
Horse-drawn Carriages
Traditional transport / 19th century dominant
Kerosene Lamps
Lighting technology / Monopoly on light
Hand Weaving
Labor intensive / Inefficient production
Telegraph Communication
Long-distance messaging / Massive infrastructure
>> WARNING: Extractive institutions prevent creative destruction. Old industries protected. Innovation suppressed. Economy stagnates.
NEW INDUSTRIES
Innovation / Growth Drivers
Innovation Blocked Extractive institutions protect incumbents
GLOBAL
PATTERNS
A snapshot of institutional quality across nations
Note: Scores are illustrative and based on multiple indices including democracy, rule of law, economic freedom, and property rights protection.
Critical Juncture
CASE: BLACK DEATH, 1346FORCE &
REPRESS
>> PROTOCOL:
Pass laws to freeze wages. Force peasants to stay on the land. Strengthen the lords.
BARGAIN &
FREE
>> PROTOCOL:
Allow labor markets to work. Wages rise. Feudal obligations weaken.
Acquire the Source
This is not a summary. This is an invitation. If this interactive experience sparked your interest, the full argument, data, and historical detail await.
480 pages / History & Political Economy
FURTHER
READING
These books form a critical dialogue with Why Nations Fail. Read them to understand the debate.
Click any book to explore its interactive experience