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

particularly disadvantaged in the age of industry.
While the variety of extractive institutions ranging from absolutism
to states with little centralization failed to take advantage of the
spread of industry, the critical juncture of the Industrial Revolution
had very different effects in other parts of the world. As we will see in
chapter 10
, societies that had already taken steps toward inclusive
political and economic institutions, such as the United States and
Australia, and those where absolutism was more seriously challenged,
such as France and Japan, took advantage of these new economic
opportunities and started a process of rapid economic growth. As
such, the usual pattern of interaction between a critical juncture and
existing institutional differences leading to further institutional and
economic divergence played out again in the nineteenth century, and
this time with an even bigger bang and more fundamental effects on
the prosperity and poverty of nations.

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North of the fence: Nogales, Arizona 
Jim 
West/imagebroker.net/Photolibrary

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South of the fence: Nogales, Sonora 
Jim 
West/age fotostock/Photolibrary

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Consequences of a level playing field: Thomas Edison’s 1880 patent for the lightbulb
Records of the Patent and Trademark Office; 
Record Group 241; National Archives

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Economic losers from creative destruction: machine-breaking Luddites in early-
nineteenth-century Britain 
Mary Evans Picture Library/Tom Morgan

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Consequences of a complete lack of political centralization in Somalia
REUTERS/Mohamed Guled/Landov

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Successive beneficiaries of extractive institutions in Congo:

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King of Kongo 
© CORBIS
King Leopold II 
The Granger Collection, NY

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Joseph-Désiré Mobutu 
© Richard Melloul/Sygma/CORBIS

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Laurent Kabila 
© Reuters/CORBIS

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The Glorious Revolution: William III of Orange is read the Bill of Rights before
being offered the crown of England by parliament 
After Edgar Melville Ward/The Bridgeman
Art Library/Getty Images

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The bubonic plague of the fourteenth century creates a critical juncture (The
Triumph of Death painting of the Black Death by Brueghel the Elder) 
The Granger
Collection, NY

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Beneficiary of institutional innovation: the King of Kuba 
Eliot Elisofon/Time & Life
Pictures/Getty

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The emergence of hierarchy and inequality before farming: the grave goods of the
Natufian 
elite 
http://en.wikipedia.org/wiki/File:Natufian-Burial-ElWad.jpg

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Extractive growth: Soviet Gulag labor builds the White Sea canal 
SOVFOTO
Britain falls far behind: the ruins of the Roman empire at Vindolanda 
Courtesy of the
Vindolanda Trust and Adam Stanford

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Innovation, essence of inclusive economic growth: James Watt’s steam engine 
The
Granger Collection, NY
Organizational change, a consequence of inclusive institutions: the factory of
Richard Arkwright at Cromford 
The Granger Collection, NY

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Fruits of unsustainable extractive growth: Zheng He’s ship alongside Columbus’s
Santa Maria 
Gregory A. Harlin/National Geographic Stock

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Bird’s-eye view of the dual economy in South Africa: poverty in Transkei, prosperity
in Natal 
Roger de la Harpe/Africa Imagery
Consequences of the Industrial Revolution: the storming of the 
Bastille Bridgeman-
Giraudon/Art Resource, NY

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Challenges to inclusive institutions: the Standard Oil Company 
Library of Congress Prints
and Photographs Division Washington, D.C.

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Noncreative destruction: abandoned Hasting railway station on the way to Bo in
Sierra Leone 
© Matt Stephenson: 
www.itsayshere.org
Extractive institutions today: children working in an Uzbek cotton field 
Environmental
Justice Foundation, 
www.ejfoundation.org

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Breaking a mold: three Tswana chiefs on their way to London 
Photograph by Willoughby,
courtesy of Botswana National Archives & Records Services

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Breaking another mold: Rosa Parks challenges extractive institutions in the U.S.
south 
The Granger Collection, NY

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Extractive institutions devour their children: the Chinese Cultural Revolution vs.
“degenerate intellectuals” 
Weng Rulan, 1967, IISH Collection, International Institute of Social
History (Amsterdam)

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