Why Nations Fail

C
HAPTER
 3 : T
HE
 M
AKING OF
 P
ROSPERITY AND
 P
OVERTY
The reconstruction of the meeting between Hwang
Pyŏng-Wŏn and his brother is taken from James A. Foley’s
interview of Hwang transcribed in Foley (2003), pp. 197–
203.
The notion of extractive institutions originates from
Acemoglu, Johnson, and Robinson (2001). The terminology
of inclusive institutions was suggested to us by Tim Besley.
The terminology of economic losers and the distinction
between them and political losers comes from Acemoglu
and Robinson (2000b). The data on Barbados comes from
Dunn (1969). Our treatment of the Soviet economy relies on
Nove (1992) and Davies (1998). Allen (2003) provides an
alternative and more positive interpretation of Soviet
economic history.
In the social science literature there is a great deal of
research related to our theory and argument. See
Acemoglu, Johnson, and Robinson (2005b) for an overview
of this literature and our contribution to it. The institutional
view of comparative development builds on a number of
important works. Particularly notable is the work of North;
see North and Thomas (1973), North (1982), North and
Weingast (1989), and North, Wallis, and Weingast (2009).
Olson (1984) also provided a very influential account of the
political economy of economic growth. Mokyr (1990) is a
fundamental book that links economic losers to
comparative technological change in world history. The
notion of economic losers is very widespread in social
science as an explanation for why efficient institutional and
policy outcomes do not occur. Our interpretation, which
builds on Robinson (1998) and Acemoglu and Robinson
(2000b, 2006b), differs by emphasizing the idea that the
most important barrier to the emergence of inclusive
institutions is elites’ fear that they will lose their political
power. Jones (2003) provides a rich comparative history
emphasizing similar themes, and Engerman and Sokoloff’s
(1997) important work on the Americas also emphasizes
these ideas. A seminal political economy interpretation of
African underdevelopment was developed by Bates (1981,
1983, 1989), whose work heavily influenced ours. Seminal

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1983, 1989), whose work heavily influenced ours. Seminal
studies by Dalton (1965) and Killick (1978) emphasize the
role of politics in African development and particularly how
the fear of losing political power influences economic
policy. The notion of political losers was previously implicit
in other theoretical work in political economy, for instance,
Besley and Coate (1998) and Bourguignon and Verdier
(2000). The role of political centralization and state
institutions in development has been most heavily
emphasized by historical sociologists following the work by
Max Weber. Notable is the work of Mann (1986, 1993),
Migdal (1988), and Evans (1995). In Africa, work on the
connection between the state and development is
emphasized by Herbst (2000) and Bates (2001).
Economists have recently begun to contribute to this
literature; for example, Acemoglu (2005) and Besley and
Persson (2011). Finally, Johnson (1982), Haggard (1990),
Wade (1990), and Amsden (1992) emphasized how it was
the particular political economy of East Asian nations that
allowed them to be so economically successful. Finley
(1965) made a seminal argument that slavery was
responsible for the lack of technological dynamism in the
classical world.
The idea that growth under extractive institutions is
possible but is also likely to run out of steam is emphasized
in Acemoglu (2008).

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