“Why Nations Fail The Origins of Power, Prosperity and Poverty” is to economic development what Mendeleev's Period Table to Chemistry. W Mukori

 LondonCNN — 

Three economists were awarded the Nobel Prize Monday for their research into how the nature of institutions helps explain why some countries become rich and others remain poor.

Daron Acemoglu, Simon Johnson and James Robinson will share the prize, which carries a cash award of 11 million Swedish kronor ($1 million).

The Nobel Committee praised the trio for explaining why “societies with a poor rule of law and institutions that exploit the population do not generate growth or change for the better.”

“When Europeans colonized large parts of the globe, the institutions in those societies changed,” the committee said, citing the economists’ work. While in many places this was aimed at exploiting the indigenous population, in other places it laid the foundations for inclusive political and economic systems.

“The laureates have shown that one explanation for differences in countries’ prosperity is the societal institutions that were introduced during colonization,” the committee added.

Countries that developed “inclusive institutions” – which uphold the rule of law and property rights – have over time become prosperous, while those that developed “extractive institutions” – which, in the laureates’ words, “squeeze” resources from the wider population to benefit the elites – have experienced persistently low economic growth.

In their 2012 book “Why Nations Fail,” Acemoglu, a Turkish-American professor at the Massachusetts Institute of Technology (MIT), and Robinson, a British professor at the University of Chicago, argue that some nations are wealthier than others because of their political and economic institutions.

The book opens with a comparison of living standards in two towns called Nogales – one in Arizona and one south of the border in Mexico’s Sonora region. Whereas some economists have argued that differences in climate, agriculture and culture have huge impacts on a place’s prosperity, Acemoglu and Robinson argue that those living in Nogales, Arizona, are healthier and wealthier because of the relative strength of their local institutions.

Last year, Acemoglu and Johnson – a British-American professor at MIT – published “Power and Progress,” a study of how technological innovations over the past 1,000 years, from agricultural advances to artificial intelligence, have tended to benefit the elites, rather than creating prosperity for all.

The authors warned that “the current path of AI is neither good for the economy nor for democracy.”

Democracy equals growth?

Asked whether their research simply argues that “democracy means economic growth,” Acemoglu said “the work we have done favors democracy” but added that democracy “is not a panacea.”

“Our argument has been that this sort of authoritarian growth is more unstable and does not generally lead to very rapid and original innovation,” Acemoglu said in a phone interview during the announcement ceremony.

In “Why Nations Fail,” he and Robinson argued that China, because it lacks inclusive institutions, would not be able to sustain its economic growth. More than a decade since the book’s publication, Acemoglu said China has posed a “bit of a challenge” to that argument, as Beijing has been “pouring investment” into the innovative fields of AI and electric vehicles.

“But my perspective is generally that these authoritarian regimes, for a variety of reasons, are going to have a harder time in achieving long-term, sustainable innovation outcomes,” he said.

The economics prize is officially known as Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel. Unlike the prizes for physics, chemistry, medicine, literature and peace, it was not instituted by the Swedish industrialist but rather by Sweden’s central bank in 1968.

Last year, the prize went to Claudia Goldin, a professor at Harvard University, for her research into women in the labor market.

Using more than 200 years’ worth of US data, Goldin showed how the nature of the gender pay gap has changed over time. Historically, much of the gap could be explained by differences in education and occupation. But in more recent history, she found, the bulk of the gap has been between men and women in the same occupation, and it largely emerges when a woman has her first child.

Zimbabwe is failed state. Forget the lunatics who are in denial that it is a failed state and ask the rest why is Zimbabwe a failed state. In their book “Why Nations Fail The Origins of Power, Prosperity and Poverty” I believe Daron Acemoglu, Simon Johnson and James Robinson have provided all we need to know to not only answer the why we are a failed state but, more significantly, to get us out of this hell-hole.

If I had my way “Why Nations Fail The Origins of Power, Prosperity and Poverty” would be compulsory reading for all especially those in position of power and authority and those entrusted with the vote. If you are going to buy someone a Christmas present this year, buy them this book.

It is not so much that Acemoglu and company said something new or profound; they did not. All they said in the book was already known. They great contribution, in my view, was to explain how all the various ideas and story relate to make some nations poor and others rich. Their work can be compared to the work of individuals like Dmitri Mendeleev in producing the periodic table. The periodic table lifted the fog of how and why chemically react with other materials the way they do.

The periodic table is an arrangement of the chemical elements, structured by their atomic number, electron configuration and recurring chemical properties. In the basic form, elements are presented in order of increasing atomic number, in the reading sequence. Then, rows and columns are created by starting new rows and inserting blank cells, so that rows (periods) and columns (groups) show elements with recurring properties (called periodicity). For example, all elements in group (column) 18 are noble gases that are largely—though not completely—unreactive.

The history of the periodic table reflects over two centuries of growth in the understanding of the chemical and physical properties of the elements, with major contributions made by Antoine-Laurent de Lavoisier, Johann Wolfgang Döbereiner, John Newlands, Julius Lothar Meyer, Dmitri Mendeleev, Glenn T. Seaborg, and others.[1][2]

Countries that developed “inclusive institutions” – which uphold the rule of law and property rights – have over time become prosperous, while those that developed “extractive institutions” – which, in the laureates’ words, “squeeze” resources from the wider population to benefit the elites – have experienced persistently low economic growth. 

This is Zimbabwe in a nutshell! Mnangagwa has just created Mutapa Fund which is empowered to cream-off the nation’s wealth from all sources, direct and indirect, legal and illegal, and yet only Mnangagwa will have the power to say how the wealth is spend! No one else or institution is allowed to have oversight on the dealing of Mutapa Fund. No one!

Zimbabwe is a failed state because for the last 44 years Zanu PF has done as it damn well pleased. Such bodies as the Auditor General have come up with damning reports of mismanagement and corruption, much to the embarrassment of the regime. Still the nation was not able to remove Zanu PF from office because the regime rigged elections and so was not democratically accountable. The creation of this Mutapa Fund operating in this black box will allow the regime to loot at leisure without ever having to fear any expose and embarrassment!