Why Nations Fail

D
IVERGING
 P
ATHS
The rise of inclusive institutions and the subsequent
industrial growth in England did not follow as a direct
legacy of Roman (or earlier) institutions. This does not
mean that nothing significant happened with the fall of the
Western Roman Empire, a major event affecting most of
Europe. Since different parts of Europe shared the same
critical junctures, their institutions would drift in a similar
fashion, perhaps in a distinctively European way. The fall of
the Roman Empire was a crucial part of these common
critical junctures. This European path contrasts with paths
in other parts of the world, including sub-Saharan Africa,
Asia, and the Americas, which developed differently partly
because they did not face the same critical junctures.
Roman England collapsed with a bang. This was less
true in Italy, or Roman Gaul (modern France), or even North
Africa, where many of the old institutions lived on in some
form. Yet there is no doubt that the change from the
dominance of a single Roman state to a plethora of states
run by Franks, Visigoths, Ostrogoths, Vandals, and
Burgundians was significant. The power of these states
was far weaker, and they were buffeted by a long series of
incursions from their peripheries. From the north came the
Vikings and Danes in their longboats. From the east came
the Hunnic horsemen. Finally, the emergence of Islam as a
religion and political force in the century after the death of

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Mohammed in 
AD
632 led to the creation of new Islamic
states in most of the Byzantine Empire, North Africa, and
Spain. These common processes rocked Europe, and in
their wake a particular type of society, commonly referred
to as feudal, emerged. Feudal society was decentralized
because strong central states had atrophied, even if some
rulers such as Charlemagne attempted to reconstruct them.
Feudal institutions, which relied on unfree, coerced labor
(the serfs), were obviously extractive, and they formed the
basis for a long period of extractive and slow growth in
Europe during the Middle Ages. But they also were
consequential for later developments. For instance, during
the reduction of the rural population to the status of serfs,
slavery disappeared from Europe. At a time when it was
possible for elites to reduce the entire rural population to
serfdom, it did not seem necessary to have a separate
class of slaves as every previous society had had.
Feudalism also created a power vacuum in which
independent cities specializing in production and trade
could flourish. But when the balance of power changed after
the Black Death, and serfdom began to crumble in Western
Europe, the stage was set for a much more pluralistic
society without the presence of any slaves.
The critical junctures that gave rise to feudal society were
distinct, but they were not completely restricted to Europe.
A relevant comparison is with the modern African country of
Ethiopia, which developed from the Kingdom of Aksum,
founded in the north of the country around 400 
BC
. Aksum
was a relatively developed kingdom for its time and
engaged in international trade with India, Arabia, Greece,
and the Roman Empire. It was in many ways comparable to
the Eastern Roman Empire in this period. It used money,
built monumental public buildings and roads, and had very
similar technology, for example, in agriculture and shipping.
There are also interesting ideological parallels between
Aksum and Rome. In 
AD
312, the Roman emperor
Constantine converted to Christianity, as did King Ezana of
Aksum about the same time. 
Map 12
shows the location of
the historical state of Aksum in modern-day Ethiopia and
Eritrea, with outposts across the Red Sea in Saudi Arabia
and Yemen.
Just as Rome declined, so did Aksum, and its historical

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decline followed a pattern close to that of the Western
Roman Empire. The role played by the Huns and Vandals
in the decline of Rome was taken by the Arabs, who, in the
seventh century, expanded into the Red Sea and down the
Arabian Peninsula. Aksum lost its colonies in Arabia and
its trade routes. This precipitated economic decline: money
stopped being coined, the urban population fell, and there
was a refocusing of the state into the interior of the country
and up into the highlands of modern Ethiopia.

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In Europe, feudal institutions emerged following the
collapse of central state authority. The same thing
happened in Ethiopia, based on a system called 
gult
,

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which involved a grant of land by the emperor. The
institution is mentioned in thirteenth-century manuscripts,
though it may have originated much earlier. The term 
gult
is
derived from an Amharic word meaning “he assigned a
fief.” It signified that in exchange for the land, the 
gult
holder
had to provide services to the emperor, particularly military
ones. In turn, the 
gult
holder had the right to extract tribute
from those who farmed the land. A variety of historical
sources suggest that 
gult
holders extracted between one-
half and three-quarters of the agricultural output of
peasants. This system was an independent development
with notable similarities to European feudalism, but
probably even more extractive. At the height of feudalism in
England, serfs faced less onerous extraction and lost about
half of their output to their lords in one form or another.
But Ethiopia was not representative of Africa. Elsewhere,
slavery was not replaced by serfdom; African slavery and
the institutions that supported it were to continue for many
more centuries. Even Ethiopia’s ultimate path would be
very different. After the seventh century, Ethiopia remained
isolated in the mountains of East Africa from the processes
that subsequently influenced the institutional path of
Europe, such as the emergence of independent cities, the
nascent constraints on monarchs and the expansion of
Atlantic trade after the discovery of the Americas. In
consequence, its version of absolutist institutions remained
largely unchallenged. The African continent would later
interact in a very different capacity with Europe and Asia.
East Africa became a major supplier of slaves to the Arab
world, and West and Central Africa would be drawn into the
world economy during the European expansion associated
with the Atlantic trade as suppliers of slaves. How the
Atlantic trade led to sharply divergent paths between
Western Europe and Africa is yet another example of
institutional divergence resulting from the interaction
between critical junctures and existing institutional
differences. While in England the profits of the slave trade
helped to enrich those who opposed absolutism, in Africa
they helped to create and strengthen absolutism.
Farther away from Europe, the processes of institutional
drift were obviously even freer to go their own way. In the
Americas, for example, which had been cut off from Europe

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around 15,000 
BC
by the melting of the ice that linked
Alaska to Russia, there were similar institutional
innovations as those of the Natufians, leading to sedentary
life, hierarchy, and inequality—in short, extractive
institutions. These took place first in Mexico and in Andean
Peru and Bolivia, and led to the American Neolithic
Revolution, with the domestication of maize. It was in these
places that early forms of extractive growth took place, as
we have seen in the Maya city-states. But in the same way
that big breakthroughs toward inclusive institutions and
industrial growth in Europe did not come in places where
the Roman world had the strongest hold, inclusive
institutions in the Americas did not develop in the lands of
these early civilizations. In fact, as we saw in 
chapter 1
,
these densely settled civilizations interacted in a perverse
way with European colonialism to create a “reversal of
fortune,” making the places that were previously relatively
wealthy in the Americas relatively poor. Today it is the
United States and Canada, which were then far behind the
complex civilizations in Mexico, Peru, and Bolivia, that are
much richer than the rest of the Americas.