Economics 3211: Assignment 2
Due Date: December7, 2015
Read D. Acemoglu and J. Robinson’s Why Nations Fail. The authors are a big-name academic economist from MIT (Acemoglu) and a political scientist from Harvard. The book constructs a “big picture” theory of why some countries have been economically successful while others have failed. Their key focus is on the role of political and economic institutions. The authors give numerous current and historical examples throughout the book. A summary of the argument with predictions is provided in the final chapter.
Format:
Based on your reading of Acemoglu and Robinson answer the questions below. Notice that answering question (2) requires you to draw up lists as you read through the book. Your submitted assignment should be typed rather than handwritten. Font sizes of 10-12 point in size are fine. Summarize the author’s arguments in your own words i.e. don't just cut and paste (that's plagiarism).
Questions:
(1) What do the authors mean by extractive institutions? What do they mean by inclusive institutions?
(2) As you read through the book keep running lists of:
(a)countries where institutions were predominantly extractive;
(b) the types of extractive practices and policies used by countries with extractive institutions;
(c) examples of countries with inclusive institutions.
When you have finished the book provide your finished lists as your answer to Question 2.
(3) Much of Chapter 1 is concerned with a comparison between the two Nogales and by extension a comparison of Mexico and the United States. What does the chapter identify as the reasons for the better economic performance of the United States?
(4) Chapter 2 considers three commonly offered explanations of differences in country success (Geography, Culture and Ignorance). Outline each of these explanations. What arguments and counterexamples do Acemoglu and Robinson offer in opposition to each of these theories?
(5) What do Acemoglu and Robinson mean by “critical junctures”? Give examples.
(6) Chapter 5 offers a discussion of Soviet economy. Outline what happened. Why was it initially able grow quickly? Why did growth bog down? According to Acemoglu and Robinson why is it difficult to sustain growth under extractive institutions?
(7) Chapter 7 is mainly concerned with the UK. The UK is further discussed in Ch. 11. According to Acemoglu and Robinson what were the key developments in the UK that set the stage for growth? Contrast this with Allen’s view (see assignment 1) of why the UK was the first country to develop.
(8) Based on the examples in your list in (2) and discussions throughout the book, write a note outlining why extractive institutions are bad for a country's growth prospects and standard of living (see especially
Chapter 8 which looks at barriers to development and the points you made in answering Question 6) .In your answer be sure to discuss the role of governing elites and institutions in creating these barriers to development. Give examples.
(9) Chapter 9 considers the effects of European colonial empires on countries outside of Europe. How did this period end up holding back development in non-European countries? Give examples.
(10) What do Acemoglu and Robinson mean by the “Iron Law of Oligarchy”? Examples of it in practice.
(11) What went right in Botswana? What went wrong in Zimbabwe?
(12) The last chapter of the book tries to use the theory developed in the book to make some predictions.
(a) What do the authors expect will happen to China? Why?
(b) Which countries do they expect will continue to be unsuccessful?
(c) Which countries do they think are likely to succeed in the future?
(13) Countries like Somalia and Afghanistan have been very unsuccessful but the problem has not been a powerful extractive government. According to Acemoglu and Robinson what is the problem in these countries. Give examples of other countries in such a situation.
(14) Big picture theories like that of Acemoglu and Robinson are always controversial.
(a) Does anything strike you as especially weak in their argument? Can you think of any countries whose experience seems to contradict their story? (draw on your own knowledge or examples from Allen’s book).
(b) Why Nations Fail has received numerous reviews. Links to reviews by some prominent
figures in the field are provided on the website. Summarize criticisms made by at least two of
these reviewers.
1