Why Nation Fail?
Daniel Benitez Goris 12-0428
Macroeconomics
Why Nation Fail?
Essay
Before explaining what Dominicans could learn from the ideas of these chapters, I will explain about what I’ve read and understood so far. First of all, in chapter 11 and 12, Acemoglu and Robinson explain the process by which the inclusive institutions are maintained over time. They argue that there is a positive feedback process of inclusive institutions that lead to mechanisms to defend the institutions; these mechanisms are usually based on the existence of a generated rule of law. Likewise, greater demands once pluralism and rule of law is implemented that will extend greater political pluralism and participation. Giving an example of the Black Act on 1722 that were against cattle thieves of the nobles. Some were saved because the legal system in England was more credible than before because it strictly followed the rules that law implemented. Later on, the right to vote was approved, in accordance with the logic of virtuous circle that prevents abuse, it was an extraordinary progress when achieved. Another example is the destruction of trust in the U.S. or the preservation of the independence of the Supreme Court despite Roosevelt's attempts to transmit their ideology to people. In Dominican Republic the distribution of power in society is concentrated in a group and this has no boundaries. In contrast, if the political institutions widely distributed power then these institutions are inclusive and progressive, rather than concentrate power in a small elite, which relies on a broad disaster of the nation. Dominican Republic has an extractive institutions (economic and political) and they maintain a vicious circle being harmful to the growth and development of our country, which is a primary reason of why in the long-run we could fail as a nation. It should be in everyone's interest to establish the type of institutions that promote prosperity. However, the elites do not think so. The economic and political inclusion can lead to redistributions that threaten the privileged position of the elites. This is because the inclusion entails a process of destruction; the fear of this process is one of the roots of opposition to change. Therefore, the establishment of such institutions necessarily involves conflict between parts of society.
In chapter 13, the authors explain that most nations fail today because their extractive economic institutions do not create the necessary incentives for people to save, invest and innovate. The political institutions of these countries tend to hand over power to a small group that benefits themselves. The authors give examples of countries that have managed to break the vicious circle of domination of small elites. For example, Botswana after independence (the critical juncture that advantage) quickly generated inclusive institutions that enabled him to establish a strong democracy. Then in chapter 14 and 15, They claim that the rise of figures like Chavez, Correa and Morales is because their objective was to end corrupt elites, however, they have led their countries to remove the control mechanisms of power and emerge as democratic versions of dictatorship. The popular support they receive is due to weak institutions of the country which led to a group of rich take advantage of their dominance for years, which has led voters to see the sign anti elite who send these figures as a better alternative. It also focuses on how China undertook reforms to grow and rejects designs of IMF feeding the consensus of Washington, privatization and anti-corruption measurement. They also mention that foreign countries, which help poor countries, have failed because there is no real democracy but function as absolutist regimes. They should meet conditions to liberalize markets. For example: the success of Brazil was because they follow a democracy after the union activity after Lula da Silva, which allowed greater market liberalization.