These exclusive institutions enrich and empower a select group of elites at the expense of the population at large. According to the authors, nations fail due to political and economic institutions that are “exclusive” rather than open. In addition to describing nations that succeed through openness, Acemoglu and Robinson also explore nations that “fail,” or that are poor and unstable with low quality of life. However, one could also argue that internal inequality comes from exclusive economic policy designed to benefit the wealthy rather than being an inherent part of technological advancement. Some economists suggest that internal inequality also decreases worker productivity-so if technology does concentrate wealth, then it wouldn’t exist simultaneously with higher productivity. From this perspective, one could argue that technological development doesn’t go hand in hand with openness-it actually concentrates wealth further instead of distributing it across the population at large. However, some experts argue that new technology also creates inequality within a nation by benefiting the wealthy much more than the poor. Historical examples like England’s early adoption of the steam engine or Japan’s tech boom in the 1970s show that being on the technological cutting edge creates lots of wealth.Īcemoglu and Robinson suggest that inequality between nations correlates with technological development-nations that adopt new technologies grow wealthy, while nations that reject them fall behind. Technological development is crucial for success, argue Acemoglu and Robinson. This gives both entrepreneurs and consumers personal incentives for technological development. Then, other citizens (who, like the entrepreneurs, can spend their money as they choose) will gravitate toward the best ideas.

Opportunities for entrepreneurship allow citizens to develop new technologies and give them a personal incentive for doing so (money). 2) Encouraging new ideas: Open institutions also encourage new ideas and technological developments.

Daron acemoglu why nations fail