Critical Junctures and Path Dependency in “Why Nations Fail”: Implications for U.S. Foreign Aid Policy

Why nations fail is a great book and a great read but reviewers like David Levine were quite good in pointing out its many flaws.

Notes On Liberty

Greeted with wide acclaim, Why Nations Fail: The Origins of Power, Prosperity, and Povertyshould put to bed all debate on using foreign aid to promote economic development on a national level.

Authors Daron Acemoglu and James A. Robinson effectively deploy path dependency to explain the trajectories of the political institutions that form the core of their argument: Nations with “inclusive” political institutions succeed economically whereas those saddled with extractive” political institutions fail. Citing cases from myriad times and places, the authors demonstrate the relationship between political institutions and economic development. The authors tether their argument to Schumpeter’s idea of creative destruction in the marketplace: No creative destruction, no long-term development. Nations encumbered by extractive political institutions typically privilege monopoly. And so, over time, their economies atrophy.

So far, so good. In deploying path dependency to explain why institutions, once in place, tend to persist, authors add a solid…

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About Jim Rose

Utopia - you are standing in it promotes a classical liberal view of the world and champion the mass flourishing of humanity through capitalism and the rule of law. The origin of the blog is explained in the first blog post at https://utopiayouarestandinginit.wordpress.com/2014/03/12/why-call-my-blog-utopia-you-are-standing-in-it/

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