Why Nations Fail: The Origins of Power, Prosperity, and Poverty

part to the virtuous circle and in part to fortunate turns of
contingency.
• How many regimes reigning over absolutist and extractive
institutions steadfastly resisted the spread of new
technologies unleashed by the Industrial Revolution.

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• How Europeans themselves stamped out the possibility of
economic growth in many parts of the world that they
conquered.
• How the vicious circle and the iron law of oligarchy have
created a powerful tendency for extractive institutions to
persist, and thus the lands where the Industrial Revolution
originally did not spread remain relatively poor.
• Why the Industrial Revolution and other new technologies
have not spread and are unlikely to spread to places around
the world today where a minimum degree of centralization
of the state hasn’t been achieved.
Our discussion will also show that certain areas that managed to
transform institutions in a more inclusive direction, such as France or
Japan, or that prevented the establishment of extractive institutions,
such as the United States or Australia, were more receptive to the
spread of the Industrial Revolution and pulled ahead of the rest. As in
England, this was not always a smooth process, and along the way,
many challenges to inclusive institutions were overcome, sometimes
because of the dynamics of the virtuous circle, sometimes thanks to
the contingent path of history.
Finally, we will also discuss how the failure of nations today is
heavily influenced by their institutional histories, how much policy
advice is informed by incorrect hypotheses and is potentially
misleading, and how nations are still able to seize critical junctures
and break the mold to reform their institutions and embark upon a
path to greater prosperity.

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