Reviewer's note
Preface to the Korean edition
preface

Chapter 1 | Two Cities Close Yet So Different
A Divided City │ The Building of Buenos Aires │ Spain's Colonial Strategy │ The Resurrection of the Mita │ England's Colonization of North America │ A New Model of Governance │ The U.S. Constitution vs.
The Mexican Constitution │ Ideas and the Patent System │ The Product of Path Dependency │ Two Billionaires Who Followed Different Paths │ Proposing a Theory of Global Inequality

Chapter 2 | Theories That Don't Fit
Poverty, Prosperity, and Growth Patterns │ Geographic Location Hypothesis │ Limitations of Jared Diamond's Theory │ Cultural Factors Hypothesis │ Ignorance Hypothesis

Chapter 3 | The Origins of Prosperity and Poverty
Economics of the 38th Parallel │ Exploitative Economic Systems vs.
Inclusive Economic Systems │ Engines of Prosperity │ Exploitative Political Systems vs.
Inclusive Political Systems │ Why We Don't Always Choose Prosperity │ Congo's Long Ordeal │ Growth Under an Exploitative Political System

Chapter 4 | Small Differences and Critical Turning Points
The World Created by the Plague │ The Formation of Inclusive Institutions │ Small but Important Differences │ The Accidental Path of History │ A Correct Understanding of the Situation │ The Vicious Circle in Africa │ The Situation in 19th-Century Asia │ Colonial Rule of the Ottoman Empire

Chapter 5 | Growth under an exploitative system
I Saw the Future │ The Limits of an Exploitative System │ Two Tribes on the Kasai River │ The First Agricultural Society │ The Institutional Innovations of the Natufians │ Unstable Exploitation │ The Collapse of the Mayan Civilization │ What Went Wrong

Chapter 6 | Institutional Drift
The Story of Venice as a Museum │ The Closure of Venice │ The Virtues of Rome │ The Limits of Virtue │ The Corruption of Rome │ The Fall of Rome │ The Case of Vindolanda │ The Crossroads │ The Influence of Early Growth

Chapter 7 | Turning Point
Groundbreaking ideas │ Persistent political conflicts │ Monopoly laws │ Glorious Revolution │ Abolition of monopolies │ Industrial Revolution │ Accelerating technological innovation │ Why England?

Chapter 8 | Barriers to Development
No printing │ Small but important differences │ Concerns about industrialization │ No revolution in Russia │ No shipping │ Prester John's absolutism │ The peculiarities of Somali society │ Persistent backwardness

Chapter 9 | The Regression of Development
Spice and Genocide │ The Slave Trade That Rocked African Society │ The Consequences of the Slave Trade Ban │ The Reality of a Dual Economy │ Native Land Law │ Backsliding Development

Chapter 10 | The Spread of Prosperity
The Australian Way │ Economic Freedom for Prisoners │ The Demand for Representative System │ The French Revolution That Broke Down Barriers │ The Fall of the Estates-General │ The Export of Revolution │ Japan and China Going Different Paths │ The Roots of Global Inequality

Chapter 11 | Virtuous Cycle
Black Law │ The abolition of black law and the birth of the rule of law │ The slow progress of democracy │ The gradual cycle of inclusive institutions │ Breaking trust │ Attempts at judicial reform │ The case of Argentina │ Positive feedback and virtuous cycle

Chapter 12 | Vicious Cycle
Sierra Leone's exploitative system │ The mechanism of the vicious cycle │ From encomiendas to land theft │ From slavery to apartheid │ The iron law of African history and oligarchy │ Negative cycles and vicious circles

Chapter 13 | Why Nations Fail Today
How to win the lottery in Zimbabwe │ The Sierra Leone Civil War │ Colombia's failure to centralize │ Reasons for Argentina's economic collapse │ 20th-century neo-absolutism │ The reality of Uzbekistan │ Egypt's distorted competitive landscape │ Commonalities of failed nations

Chapter 14 | Countries Breaking the mold
Botswana, a country that forges its own destiny │ A critical juncture and the interplay of existing institutions │ The end of exploitation in the American South │ A reborn China │ The winds of change

Chapter 15 | Understanding Prosperity and Poverty
The historical origins of inequality | Predictions for sustainable growth | The irresistible temptation of authoritarian growth | The limits of modernization theory | Prosperity is not an object of engineering | The failure of foreign aid | The transformation of Brazilian society | Empowerment

Acknowledgements
supplement
Notes and Sources │ Map Sources │ References │ Index

Ranked #1 on Amazon in Politics and Economics, Highly Recommended by the New York Times
Highly recommended by Jared Diamond, Francis Fukuyama, and Niall Ferguson.

“Economic recession, social polarization,
Youth unemployment, anxiety…
“The problem is the system.”
The Wealth of Nations: Finding the Answer to National Failure

Some countries are poor, some are rich.
Here are some failed states.
These are countries suffering from poverty, corruption, and poor education.
Why did they fail? How can we avoid repeating the same mistakes?
This book, Why Nations Fail, presents the most compelling argument of any theory to date.

This book is written by Daron Acemoglu, a young scholar who is currently receiving attention and a professor of economics at MIT, and James A.
Robinson's co-authored book offers a simple yet compelling explanation for why so many countries fail to develop, and furthermore, where prosperity, poverty, and global inequality lie today.

Drawing on 15 years of research and remarkable evidence from across the globe—including the Roman Empire, Mayan city-states, medieval Venice, the former Soviet Union, Latin America, England, Europe, the United States, and Africa—the authors explain what makes the difference between failed and successful nations.
A particularly notable example is South and North Korea.
As the authors note in the preface to the Korean edition, it “contains all the elements of a general theory that could explain why the vast institutional differences that arose on the Korean Peninsula divided all countries around the world into rich and poor.”


Darren Acemoglu and James A.
According to Robinson, the decisive factor in determining a nation's success or failure is not its geographical, historical, or racial conditions, but its 'institutions'.
He adds that the fate of a nation can be completely different when political choices are combined with economic factors.
What this book suggests is simple.
While economic institutions play a key role in determining a country's wealth and poverty, it is politics and political institutions that determine what kind of economic institutions a country will have.
It is precisely the interaction of these political and economic systems that determines the wealth and poverty of a country.


This book, "Why Nations Fail," has received much praise in academic circles for its interdisciplinary research encompassing politics, economics, and history, and for its more systematic and persuasive development theory focusing on institutions.
With its clear logic and solid evidence, this book will provide us with profound insights that will serve as a wake-up call to the world.


A decisive factor in determining the prosperity and poverty of individuals and nations

Why is Britain better off than Egypt? The authors raise the question, which seems self-explanatory with the simple answer, "Because it's Britain or Egypt." Instead, they ask the question, "Why?"
And he says that the reason some societies are poor is not because of geography or culture, but because those in power make choices that promote poverty.
It means that 'the wrong choice is not made due to the leader's mistake or ignorance, but is intentional.'
To understand why nations fail today, the authors look back to the past and examine the historical background of each society.


Let's go back to the story of Britain and Egypt.
Darren Acemoglu and James A.
Robinson explains that the reason Britain is better off than Egypt is because of the revolution that took place in England in 1688, which transformed not only the political but also the economic environment.
'Through struggle, the people won more political rights and used those rights to expand economic opportunities.
As a result, they experienced fundamentally different political and economic paths, changes that culminated in the Industrial Revolution.' However, these changes did not spread to Egypt, which ended up becoming a British colony.
He adds that although there were subsequent steps toward independence and the overthrow of the monarchy, they failed to fundamentally change politics and only placed power in the hands of an elite indifferent to the well-being of the common people.


The authors also suggest that to understand where the differences between poverty and prosperity come from, we need to look closely at the impact of major events, particularly those that upset the balance of power in a society.
These 'critical turning points' are double-edged swords that can drastically change the path a country takes.
These include the Black Death in Europe, the death of Mao Zedong in China, the discovery of the American continent, and the colonization and decolonization that took place around the world.
Each society is bound to have different systems due to its own unique customs and practices.
The book argues that these institutional differences create institutional drift, which can lead to significant differences over centuries and influence how we respond to shifts in political and economic circumstances when confronted with critical junctures.


For example, the Black Death and the expansion of world trade after 1600 not only served as crucial turning points for the European powers, but also began to create serious differences as they interacted with existing, different institutions.
The book says this:
In 1346, Western European peasants enjoyed relatively more rights and autonomy than their Eastern European counterparts, but the arrival of the Black Death led to the collapse of the feudal system in Western Europe, while in Eastern Europe it resulted in a different outcome: the establishment of judicial serfdom.
Because Eastern and Western Europe had already reached a crossroads by the 14th century, the new economic opportunities of the 17th, 18th, and 19th centuries had fundamentally different implications for the two great European regions.
Moreover, because the power of the English crown in 1600 was weaker than that of France and Spain, trade across the Atlantic opened the way for new institutions based on broader pluralism in England, while in France and Spain it only strengthened the power of the crown.

As we have seen in the examples of Britain and Egypt, the Industrial Revolution was able to sprout and develop most significantly in Britain thanks to its inclusive economic system.
Of course, this economic system was established on the basis of the inclusive political system brought about by the Glorious Revolution.
The Glorious Revolution created a more open political system, more sensitive to economic needs and social aspirations.
As a result, the authors argue, today's economic growth was possible.


Darren Acemoglu and James A.
Robinson also focuses on South and North Korea.
'Today, North Korea's standard of living is comparable to that of sub-Saharan African countries.
This is only one-tenth of the average standard of living in South Korea.' He says the answer to why North and South Korea have taken such drastically different paths to fate lies in their systems.
According to the authors, the reason South Korea has such a completely different economic system from North Korea is because the interests and goals of those who determined its social structure were different.
South Korea has an inclusive economic system, meaning that private property rights are protected, the legal system is fairly enforced, and public services are provided in a competitive environment where everyone can exchange and contract.
The introduction of such an inclusive economic system can stimulate economic activity, increase productivity, and achieve economic prosperity.
On the other hand, the situation was different in North Korea.
Power is something that, depending on who holds it and for what purpose, some individuals or groups can gain greater benefits through exploitative systems.
Even if we look at the fundamental logic of an exploitative system, it must create wealth that can be exploited. However, due to its nature, it fails to lead to creative destruction and technological progress is limited.
It is not possible to create incentives that can stimulate economic activity.

It is precisely on this point that the authors argue that the reason why countries are failing economically today is precisely because of these 'exploitative systems.'
This is undoubtedly a common characteristic of failed countries.
Although the specifics may differ due to the differences in each country's history and social structure, the reason exploitative systems persist so persistently is that exploitative political and economic systems exert a synergistic effect and support each other, creating enormous obstacles that hinder gradual improvement.
This kind of cycle repeats itself over and over again, creating a vicious cycle.
On the other hand, inclusive political systems tend to support inclusive economic systems, creating a virtuous cycle.
Inclusive political systems, combined with inclusive economic systems, lead to more equitable income distribution, broader social empowerment, and a more level playing field in politics.

Ultimately, as the book continually emphasizes, “the solution to overcoming the political and economic failures of today’s nations is to transform exploitative institutions into inclusive ones.” This is by no means easy, the authors argue, because once a society is organized in a certain way, it exhibits a tendency to persist in that way, but it’s not impossible either.
The vicious cycle can be broken by the existence of some inclusive elements within the system, by the existence of a broad coalition of forces to lead the struggle against the existing regime, or by the mere "contingencies of history."
Ultimately, it is people who create the ‘system’.
The economic system under which the people will live is decided through the political process, and the people who carry out this process as agents are politicians.
This is precisely why, as this book explains, 'who' creates what system is important in determining the success or failure of a country.


In an age of polarization, advice from an MIT economist has captured the world's attention.

This book, "Why Nations Fail," has received praise from leading media outlets and scholars around the world.
Jared Diamond (author of Guns, Germs, and Steel), Francis Fukuyama (author of The End of History and the Last Men), Niall Ferguson (author of Civilization), Steven Levitt (author of Freakonomics), and Michael Spence, Robert Solow, Kenneth J.
Arrow, Gary S.
Becker and other prominent figures have been recommending this book.
In particular, George Akerlof, author of Wild Impulses, likened the book to Adam Smith's Wealth of Nations.


This book was also nominated for the 2012 Business Book of the Year award (to be announced on November 1) by the Financial Times and Goldman Sachs, along with Steve Jobs' autobiography, Steve Jobs: The Exclusive Biography, and Michael Sandel's What Money Can't Buy: The Moral Limits of Markets.
This award is now in its eighth year, with the first winner being Thomas Friedman's The World is Flat in 2005.


Daron Acemoglu and James A., authors of the book Why Nations Fail,
Robinson is a professor of economics at MIT and a professor of political science at Harvard University, respectively, and is a scholar who has recently been attracting attention.
In particular, Daron Acemoglu received the John Bates Clark Medal in 2005, which is awarded to an economist under 40 who has made the most significant contribution to economic thought and knowledge.
Paul Samuelson, who won the Nobel Prize in Economics in 1970, also received the award in 1947, as did Milton Friedman, Kenneth J.
Arrow, Lawrence Klein, Robert Solow, Gary S.
Famous economists such as Becker, Joseph Stiglitz, and Paul Krugman also won the John Bates Clark Medal and then the Nobel Prize in Economics.
Forty percent of medal winners went on to win the Nobel Prize in Economics, on average, 22 years later.
That's why the John Bates Clark Medal is called the "preliminary Nobel Prize in Economics."


Daron Acemoglu conducts research across a wide range of fields, including political economy, development economics, economic growth, technology, income inequality, and labor economics, and this book is the culmination of his research.
It is through this kind of comprehensive research that we have uncovered the close connection between politics and economics.
In their book, Why Nations Fail, Daron Acemoglu and James A.
Robinson's new political economic theory answers the questions facing the world today.
Can China's rapid growth, built on its authoritarian growth model, continue to outpace the West? Is America's golden age behind us? Is there no way to rescue half the world from the swamp of poverty?

The message they convey is simple.
What determines a country's failure or success is how inclusive its political and economic systems are.
But why are so many countries today failing to achieve this simple goal?
This book will change the way we view and understand the world, as we grapple with the question, "Why are some countries poor and others rich?"