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Feature Article of Thursday, 10 January 2013

Columnist: Addo, Kofi

A new Year Resolution for every Ghanaian

Hi ,

I came across this book last year and I sent some reviews to some of my friends. I have started reading it and I believe every Ghanaian should read it. I will help us to understand why we are still poor and what we can do to change that situation to be develop like the developed countries that we flock to sweating and using our energies to develop. He gives the example of Ghana after independence on page 65, he mentions Drs Nkrumah and Busia and why they did not do what will have really taken to transform our nation.

The earlier we learn why it is so important to change our governments if the fail to perform is linked to the economic development and prosperity the better.

That is why is is extremely important that the supreme court will be unbiased in its ruling on the election case before it. Any biasness in it ruling will set the nation back several years and will cause a lot of people to lose faith it our legal system.Private people will move their monies out of the country and foreign investors will be deter from investing in the country.That is why all those who are saying Fama Nyame "give it to God", live it, let it go, we want peace let move on are not helping the nation. They are storing up big trouble for the nation. We all remember what happened in June 4th 1979.

We need to let Justice, Truth and Honesty come out and it will bring a lot of changes to our political institutions that will cause change to our economic institutions. That is the key to prosperity. The political institutions affects economic institutions. But the key is for this to happen there should be a process to change the political institutions us we have being doing in elections in the past 20 years. It is through this constant changes that well bring the refinement that is need to start affecting the economic institutions for Ghana to take off. But if we cannot change our politicians and institutions through, free, fair, transparent,rig and manipulation and corruption free elections the there is no way that our dear nation will move forward. We will still be in the economic situation that we are in.

I pray that every Ghana will this year at least resolve to read one book and be it this one to help to make our nation great.

Why ‘Why Nations Fail’ Fails (Mostly): Review of Acemoglu and Robinson - 2012's Big Development Book Submitted by Duncan Green on Wed, 12/12/2012 - 15:56

Every now and then, a ‘Big Book on Development’ comes along that triggers a

storm of arguments in my head (it’s a rather disturbing experience). One

such is Why Nations Fail, by Daron Acemoglu (MIT) and James Robinson

(Harvard). Judging by the proliferation of reviews and debates the book has

provoked, my experience is widely shared.

First, what does the book say?

‘The focus of our book is on explaining world inequality’, which is

essentially a phenomenon of the last 200 years (certainly at its current

extreme levels) – the average income of a conquistador was only about twice

that of a citizen of the Inca empire.

Inclusive Institutions rock: ‘Countries like Great Britain and the US

became rich because their citizens overthrew the elites who controlled

power and created a society where political rights were much more broadly

distributed, where the government was accountable and responsive to

citizens, and where the great mass of people could take advantage of

economic opportunities.’

Politics trumps economics: ‘While economic institutions are critical for

determining whether a country is poor or prosperous, it is politics and

political institutions that determine what economic institutions a country

has.’

Failure is the norm: ‘To understand world inequality we have to understand

why some societies are organized in very inefficient and socially

undesirable ways. Nations sometimes do manage to adopt efficient

institutions and achieve prosperity, but alas, these are the rare cases.

Most economists have focused on ‘getting it right’, while what is really

needed is an explanation for why poor nations ‘get it wrong.’

One of the core problems of most institutional arrangements is that those

in power have ‘a fear of creative destruction’ – that the disruptive effect

of innovation and capitalism will undermine their power base. The luddites

in the presidential palace or the chamber of commerce do far more damage

than the protesters on the streets. They therefore act to stifle it –

elites’ interests are opposed to those of the long-term development of

their country. An ‘iron law of oligarchy’ means that even when oligarchs

are overthrown, the revolutionaries, like the pigs in Animal Farm, often

come to resemble them. ‘New leaders overthrowing old ones with promises of

radical change bring nothing but more of the same’. Understanding how

change doesn’t happen is as important as understanding why it does.

In contrast, when a combination of institutional accident and inspired

leadership leads to an elite that is willing to accept creative destruction

(as, the authors argue, is historically the case in the US), then a take

off can occur.

The style is captivating – dotted with great historical accounts, amusing

and telling anecdotes (in the 16th Century African kingdom of the Kongo

‘taxes were arbitrary: one tax was even collected every time the king’s

beret fell off’). Great use of contrasts and ‘natural experiments’ – Mexico

v US at the border; Bill Gates v Carlos Slim.; North Korea v South. The

pace is breakneck, hopping manically between countries and centuries, from

the rise and fall of the Roman Empire to the disappearance of the Mayas to

the rise of Japan, plucking examples to illustrate the thesis.

The strongest part of the book for me was its focus on the dynamics of

change. It almost feels like physics – path dependence is key; minor ‘

butterfly’s wing’ differences in initial conditions caused by gentle

‘institutional drift’ make a huge difference when a country hits a

‘critical juncture’ (e.g. the French Revolution, or the Black Death. in 14

th Century Europe (left), which wiped out a large part of the labour force

and so transformed economies), and can set them on diametrically different

paths. ‘The richly divergent patterns of economic development around the

world hinge on the interplay of critical junctures and institutional drift.

Existing political and economic institutions – sometimes shaped by a long

process of institutional drift, and sometimes resulting from divergent

responses to prior critical junctures, create the anvil upon which future

change will be forged.’

The problem is, much of this only really works in hindsight – almost by

definition, there are always lots of minor differences floating around, and

it’s impossible to tell in advance which are going to provide the

butterfly’s wing that determines that (for example) the industrial

revolution takes place in Britain and not Spain. This is a book written

almost entirely in the rear view mirror.

The trouble with these grand theories is that when they coincide with your

own prejudices, they feel like a flawless romp through history. But if you

are uncomfortable with the numerous assumptions, explicit and implicit, you

get a sense of suspicion and vertigo – it feels like you’re being conned

(and the complete absence of footnotes make it harder to check the source

of some of the sweeping claims). The reader is being asked to take an awful

lot on trust here. And I kept hearing a phrase of Thandika Mkandawire’s in

my head: ‘a theory that explains everything, explains nothing.’

The book’s biggest problem (at least for me) is the authors’ love affair

with the American Dream (though not perhaps, American Reality). In their

account, successful institutions bear a remarkable resemblance to America’s

constitution, separation of powers etc etc. That means that the China

question hovers over the book throughout, and their fairly perfunctory

attempt to answer it is deeply unconvincing. China is portrayed as on the

wrong side of history, pursuing ‘authoritarian growth’, while trying to

defy an inexorable push towards matching economic inclusion with the

political equivalent.

But can this book really be arguing that China’s economic transformation is

substantially more fragile than that of, say, Brazil? Apparently so.

‘Growth under extractive political institutions, as in China, will not

bring sustained growth and is likely to run out of steam’ is a hell of a

throwaway line, especially when you don’t say whether that might be in one

year or a hundred. Nor do they buy into the optimistic liberal account that

holds that China’s growth will create pressure for political reform – A & R

think it will hit a growth ceiling before that reform happens, with

unforeseeable, but chaotic consequences.

More generally on the role of the state, the book seems to swallow the

rather discredited argument of the ‘East Asian Miracle’ school that ‘South

Korea is a market economy, built on private property.’ (Dani Rodrik and

Ha-Joon Chang beg to differ.) The authors systematically downplay the role

of industrial policy and a hands-on state in its take-off . ‘[The] process

of innovation is made possible by economic institutions that encourage

private property, uphold contracts, create a level playing field and

encourage and allow the entry of new businesses…. It should therefore be no

surprise that it was South Korea, not North Korea, that today produces

technologically innovative companies such as Samsung and Hyundai.’. There

is no real attempt to explore the concept of ‘developmental states’, a term

originally coined to describe Japan’s take-off, but one which is

increasingly interesting a range of developing countries as they see the

more liberal capitalist economies being rapidly overtaken by ‘state

capitalists’ like China and Brazil. But for A & R, the high growth figures

of countries like South Korea are always ‘in spite of’ a hands-on state,

not ‘because of’.

Which all reminds me of a baffling exchange in 2003 with the FT’s Guy de

Jonquieres, as we looked out over the beach at the WTO summit in Cancun

(NGO advocacy’s a tough gig sometimes). Me: ‘how can you say state

intervention destroys economies, when South Korean industrial policy has

been so successful’. Guy: ‘But think how much better South Korea would have

done if the state had stayed out of it.’ Err, right.

Overall, the book left me with a sensation of raised expectations, which

were then disappointed. That was summed up in the book’s bizarre finale.

After a hyperactive romp across the millennia this purported survey of what

works fizzles out, pinning its hopes on – wait for it – the media, Facebook

and Twitter. Oh dear. All that history ends not with a bang but a tweet.

For more erudite reviews and arguments, with my entirely unscientific

assessment of the star rating they give the book (I guess I’d give it

three, slightly above the average), take your pick from

References

1. ^.

http://www.independent.co.uk/arts-entertainment/books/reviews/why-nations-fail-by-daron-acemoglu-and-james-a-robinson-7785734.html

2. ^. http://whynationsfail.com/

3. ^. http://www.bbc.co.uk/programmes/b01kprq6

4. ^. http://www.youtube.com/watch?v=uyBMI0UwwU4

5. ^. http://www.youtube.com/watch?v=ZlovTtskPfY

6. ^.

http://www.washingtonpost.com/entertainment/books/book-review-why-nations-fail-by-daron-acemoglu-and-james-a-robinson/2012/04/20/gIQAcHs8VT_story.html

7. ^.

http://www.guardian.co.uk/books/2012/mar/11/why-nations-fail-acemoglu-robinson-review

8. ^.

http://www.nytimes.com/2012/04/01/opinion/sunday/friedman-why-nations-fail.html

9. ^. http://online.wsj.com/article/SB10001424052702304724404577293714016708378.html

10. ^

http://marginalrevolution.com/marginalrevolution/2012/05/jared-diamond-reviews-why-nations-fail.html

11. ^

http://www.foreignaffairs.com/articles/138016/jeffrey-d-sachs/government-geography-and-growth?page=show#

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