8 REASONS WHY NATIONS FAIL | ANIMATED BOOK REVIEW

what makes United States a powerful

answer rich

why did the Ottoman Empire collapse

these are some questions we seek to find

a satisfying answer there are many

theories attempt to explain why some

countries are rich and others poor

according to the geography hypothesis a

country's economic situation is based on

its Geographic circumstances this theory

is based on observation that many of the

poorest countries are in tropical

regions while wealthy countries tend to

be in color climate zones of this

theories in some cases true but there

are some that prove the opposite let's

talk about Singapore despite for its

location in the tropics Singapore is a

wealthy country

similarly the geography hypothesis is

unable to explain the stark differences

between neighboring countries northern

South Korea the culture possesses music

country's culture its religion values

and cultural attitudes as the this is a

factor for a long time people believed

that protest and work ethic which is

based on the idea that works the duty

was the key to economic success whereas

Confucian values such as humanity lionel

t and honesty impeded it but this theory

does not hold water either it too cannot

explain the difference between North and

South Korea which despite a similar

culture developed extremely differently

the ignorants hypothesis assumes that

economic differences are determined by

the ignorance or incompetence of the

ruling class in other words incompetent

politicians are to blame for market

failures and plunging their countries

into poverty

however politicians are often aware of

their problems

it is not hearing competence that leads

them to take the wrong actions more

often than not it is due to external

incentives and obstacles because they

want to satisfy interest groups that are

important for them all the theories I've

mentioned highlight parts of the problem

at hands and are valid to certain extent

but they do not deliver a general

explanation of the underlined

issues integrative institutions are the

key to nation's lasting economic success

from the - the 16th century England to

Botswana history is chock-full of

examples that proved that the most

important factor for a nation's

prosperity is its institutional

structure integrative institutions are

what enable white democratic

participation in politics and the

economy they prevent the resources from

being overexploited and individual

people from enriching themselves without

benefiting the rest of the society in

any way integrative institutions are

characterized by a variety of individual

rights such as the freedom to choose a

profession access to education and

competitive less controlled markets for

labor capital goods and services nearly

all nations that have achieved a high

standard of living have integrative

institutions they said incentives for

education performance and innovation and

create a binder income distribution

preventing small elite groups from

abusing their power and any potential

profit from unfair competition the

stories of the two of the richest men in

the vaults make a clear case for

understanding the difference between

nations width and we've had integrative

institutions while Carlos Slim got rich

in Mexico a country we've had

integrative institutions by exploiting

his monopoly

in land and telephony Bill Gates a

masses fortune in the US by inventing

products that created value for the

entire society a value that far

surpassed his own income this type of

value is only possible in countries with

integrative institutions where there is

the incentive structure necessary for

carrying viable market economy

integrative institutions emerge from

historical coincidences and bring about

lasting prosperity integrative

institutions emerge from historical

consonances one small incidents sets off

a chain of reaction that with time ends

up causing extensive reforms the plaque

for instance

was a catalyst of the Glorious

Revolution in England which ultimately

brought about pluralism and free

enterprise the plaque had taken such a

heavy toll on people of working age that

it caused a labor shortage as a result

workers had more power and began

demanding higher wages and social rights

this phenomenon ran parallel to the

birth of a class of prosperous merchants

who opposed royal control and demanded

the liberalisation of trades economic

institutions began emerging currents in

free trades a constitutionalist state

and the protection of private property

this revolution will eventually leads to

the Industrial Revolution 50 years later

integrative institutions in the United

States also a sort of kind sedans

colonists in one of the first British

colonies attended to exercise

authoritarian control over the English

workers when this proved ineffective the

colonists decided to give the workers

incentives ultimately granting them a

kind of elected Parliament's that wilded

the settlements political power and will

later become the model for American

institutions most countries that have

achieve lasting prosperity have one

thing in common at certain points in

their history people seize the

opportunity to create solid integrative

institutions centralized political power

is crucial for lasting prosperity a

country can only achieve a high level of

prosperity when it meets the following

two conditions first it has to have

integrated political and economic

institutions seconds political power

must be centralized a certain degree as

prosperity can only exist where money

goes into making investments and

creating innovations both of these

conditions necessary then reliable and

transfer of states that kind of trust

can only exist in a state that has a

clear political course indisputable

Authority and viable popularly accepted

government's investors and innovators

only spring into action when they assume

they will reap the fruits of their labor

if they have doubts they will leave for

a different country

when political power is spread out so

broadly it can lead to cows this is what

happened in Somalia are there no

publicly accepted institutions to ensure

security or structures that are

fundamental for a stable constitutional

states ultra Syrian institutions

prevalent poor countries through a

vicious circle historically speaking

integrative institutions are an

exception to the rule

extractive institutions are far more

common expect of institutions are

designed to benefit only small elites

who above all want to retain control

over politics and the economy despite

its common fundamental traits the

individual character of extractive

institutions varies from country to

country in North Korea for instance

citizens are not granted the right to

own property in the Congo institutions

are still set up the way they were in

the days of colonialism even though the

whitesman is not in control as small

elites cashes in on the country's

resources and raw materials are sent out

of the country

as quickly and cheaply as possible

countries with extractive institutions

often end up failing into a vicious

circle the elite exploit their political

power to benefit themselves economically

if they have gained political and

economic control they do everything they

can to strengthen and keep that power

whether by means of intimidation or

arbitrary distribution of privileges the

free markets which could potential