Why Nations Fail

Topics: Economics, Innovation, Economy Pages: 2 (515 words) Published: September 1, 2012
What Makes Countries Rich or Poor? by Jared Diamond | The New York Review of Books As one of the most fundamental features of modern economy is widening of the gap between rich and poor countries, explaining the conditions and factors, which influence wellbeing of a country is of particular importance. Benjamin Franklin once said that understanding of the problem’s cause is the first step to its solution. Therefore, analyzing the roots of differences in wellbeing of various countries can let us work out solutions for narrowing the existing gap. In their book “Why Nations Fail: The Origins of Power, Prosperity and Poverty” D.Acemoglu and A.Robinson mark out a number of factors, which influence the wellbeing. These factors are interrelated, but can be divided into historical, institutional, climatic, environmental and technological ones. I agree with the authors, who consider ‘good institutions’ factor one of the most important in the context of prosperity. It is evident that unstable political situation, complexity and discrepancy of legislation, predominance of red tape and high level of corruption complicate business activities (especially, by creating unreliable investment climate), favour the development of shadow economy and prevent the government from introducing organizational and technological innovations. These problems, by-turn, cause low productivity of labour, poverty, brain drain and even pollution of the environment. In other words, ‘good institution’ factor influences wellbeing not only by itself, but acts as a root for derivative technological and environmental problems. To my mind, ‘good institutions’ factor can partly stem from the historical one. Countries with long duration of government and well-established democratic traditions are more likely to develop good legislation and clear institutional infrastructure of its application. As a future lawyer I completely agree with the authors, who claim that economic growth is much more likely under...
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