Brief Review on Why Nations Fail (2012)

1. Now, let’s talk about why nations fail #WNF

2. In March 2012, Daron Acemoglu (MIT) and James Robinson (Harvard) launched their book that attempted to answer, why some nations rich while others poor? #WNF

3. Do cultural or geographic factors determine the economic development? #WNF

4. To answer this question, they drew a long historical line, from the Roman Empire, Mayan, Venice, Soviet Union, to Europe and US #WNF

5. Why Egypt is so much poorer than the US?

6. Some factors may explain: corruption, oppression, and bad education under Mubarak regime #WNF

7. But the determinant factor in Egypt was the exclusive political institution #WNF

8. The political power was monopolized by a narrow elite #WNF

9. So it is not the geographic or cultural factors that make a nation poor #WNF

10. US and UK were rich because political rights were distributed more broadly #WNF

11. Elites were overthrown, government was accountable, and people could seize economic opportunities #WNF

12. Innovation were encouraged, patents and property rights were protected by government #WNF

13. Other example, Nogales in Arizona (US) and Nogales in Sonora (Mexico), only divided by a fence #WNF

14. People in Nogales Arizona are relatively wealthy, children go to school, have access to health care #WNF

15. Political system is inclusive, democracy is implemented #WNF

16. In Nogales Sonora, people are relatively poor, low educational level, high infant mortality #WNF

17. Democracy is a rare evident in this area# WNF

18. So, these two Nogales have similar culture and geography, but different prosperity #WNF

19. Similar case in South Korea and North Korea #WNF

20. Again, It is inclusive political institution that matters #WNF

21. Inclusive institutions provide basic service to public, people can vote easily #WNF

22. My concern, not everybody is ready for open institutions #WNF

23. One good aspect of open institution is its emphasis on innovation and patent #WNF

24. Patents were blooming in the US in the 19^th century #WNF

25. “If you were poor with a good idea, you could take out a patent, which was cheap”#WNF

26. Then you can start your own business, through the loan from investor #WNF

27. Having an idea-starting a firm-and getting a loan #WNF

28. It is like Thomas Edison who applied science to create profitable businesses #WNF

29. Fair competition among investors should be maintained to keep low interest rates #WNF

30. Inclusive economic institutions create incentives for people #WNF

31. Incentives to become educated, to save and to invest, to innovate #WNF

32. Political institutions determines the type of economic institutions, and how they work #WNF

33. Remember my sociology professor, institutions shape our daily life #WNF

34. Open institutions stimulate the creation of entrepreneurs and good governance #WNF

35. A funny quote from Montesquieu, people in tropical climate tend to be lazy, don’t work hard, so they are poor #WNF

36. But Acemoglu and Robinson argue that it is because the diseases in tropical countries are more severe than in any other parts of the world #WNF

37. And again, it is because the failure of government to provide such a sufficient health care system #WNF

38. How about China? under Deng Xiaoping they transformed their political and economic institutions to be more open #WNF

39. Again, inclusive political institutions tend to support inclusive economic institutions #WNF