why nations fail

Nations fail primarily due to the nature of their political and economic institutions. According to experts and research summarized in the book "Why Nations Fail" by Daron Acemoglu and James Robinson, the main reason for the disparity in wealth and development among nations is not geography, culture, or ignorance of policies, but rather the presence of either "inclusive" or "extractive" institutions. Inclusive institutions foster prosperity by creating incentives for innovation, quality education, infrastructure investment, and broad economic participation. These institutions are characterized by democratic governance, rule of law, and accountable governments, which empower the population and ensure broad benefits from economic activities. On the other hand, extractive institutions concentrate power and wealth in the hands of a small elite who use state power for personal gain, often through corruption and coercion. These institutions stifle innovation, block economic growth, and maintain social and economic inequalities, causing nations to remain poor or fail economically. Examples illustrating this include the stark contrast between North Korea and South Korea: despite similar cultural and geographic backgrounds, South Korea's inclusive institutions have driven remarkable prosperity, whereas North Korea’s extractive institutions have resulted in poverty and repression. The failure of nations arises from entrenched political and economic systems where elites resist changes that might threaten their power, creating a vicious cycle that is difficult to break. Attempts to engineer inclusive institutions externally have often failed because such institutions tend to develop gradually under particular historical and political conditions. In summary, the core reason nations fail lies in the presence and longevity of extractive institutions that prevent broad-based economic participation and growth, whereas inclusive institutions provide the foundation for sustainable prosperity and development.