Feature Article of Thursday, 10 January 2013
Columnist: Addo, Kofi
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
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
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
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
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
9. ^. http://online.wsj.com/article/SB10001424052702304724404577293714016708378.html