The document summarizes chapters from the book "Why Nations Fail" by Daron Acemoglu and James Robinson. It discusses the authors' thesis that economic prosperity depends on inclusive political and economic institutions, while extractive institutions lead to poverty. The analysis examines several historical examples to show how institutional developments can create either virtuous or vicious cycles that reinforce inclusive or extractive institutions over time. However, the summary also notes some shortcomings, including the book's failure to explain how to prevent the emergence of extractive institutions or acknowledge that growth under inclusive institutions is not guaranteed. It argues the book is still relevant to understanding Pakistan's challenges in developing extractive political institutions that benefit elites over broader society.

1. WHY NATIONS FAIL: The
Origins Of Power, Prosperity
and Poverty
Daron Acemoglu & James A. Robinson
Presentation by: Mahvish Shafique
Roll # 04

2. Sequence of presentation
 Introduction of Authors
 Introduction of book
 Chapter wise Summary
 Thesis of Authors
 Analysis
 Relevance of the book with Pakistan
 Conclusion

3. Authors
 Daron Acemoglu
 Turkish Born American Economist
 Professor of Economics at MIT
 James A. Robinson
 An Economist
 Political Scientist
 Professor at Harvard University

4. Introduction of the Book
 Title: WHY NATIONS FAIL
 Authors: DARON ACEMOGLU AND JAMES A. ROBINSON
 Language: English
 Subject: Comparative Politics
 Genre: Non-Fiction
 Publisher: Crown Business, New York.
 Place of Publication: United States of America
 Date of Publication: March 20, 2012.

5. Chapter 1: So Close And Yet So Different
 Comparison of two sides of Nogales city
 American side of Nogales
 Mexican side of Nogales
 Reason of Difference
 Difference in political and economic institutions
 Historical development of institutions

6. Chapter 2: Theories That Don’t Work
 The geography hypothesis
 People in tropical areas tend to be lazy
 The culture hypothesis
 Religion, beliefs, values and ethics determine the fate of the nation
 The ignorance hypothesis
 Rulers do not know how to make poor countries rich
 All three hypothesis are flawed

7. Chapter 3: The Making of Prosperity and
Poverty
 North Korea vs South Korea
 Inclusive Political Institutions
 Centralised and pluralistic
 Extractive political institutions
 Narrow, absolutist and uncostrained
 Inclusive political institutions give birth to inclusive economic institutions
 Extractive political institutions give birth to extractive economic institutions

8. Chapter 4: Small Differences and Critical
Junctures: The weight of History
 History and critical junctures shape the path of political and economic trajectory
 Why some nations make the transition to inclusive economic and political
institutions
 while others do not

9. Chapter 5: Growth under Extractive
Institutions
 Growth can take place under extractive institutions
 Sustainable growth needs technological changes
 Growth under extractive institutions will not be sustainable

10. Chapter 6: Drifting Apart
 Inclusive institutions can be reversed
 Example of Venice
 Political and economic institutions were overthrown
 Prosperity was reversed
 Today it is rich because people want to spend their money, admiring its past glory

11. Chapter:7 The Turning Point
 Fear of creative distruction is a hindance in development
 New technology renders old prectices obsolete
 Resistence is shown by the victims of creative destruction
 Industrial revolution in England

12. Chapter 8: Barriers to development
 Opposition to new technology is barrier to development
 Ottomans opposed printing press
 Absolutist regimes blocked the spread of industry
 Consequence; they lagged behind

13. Chapter 9: Reversing Development
 European colonalism impoverished large parts of the world
 Colonies did not benefit from industrialisation
 Rather strengthened already extractive institutions

14. Chapter 10: The Diffusion of Prosperity
 Some parts of the world took different parts to prosperity from that of Britain
 Industrial Revolution of the English economy to the United States and Australian
transformation

15. Chapter 11: The Virtous Cycle(1/2)
 Dictatorship is not welcomed in inclusive political institutions
 Inclusive political institutions support and are supported by inclusive economic
institutions
 Removes extractive economic relations
 Slavery and serfdom

16. Chapter 11: The Virtous Cycle(2/2)
 Reduces the importance of monopolies
 create a dynamic economy
 Reduce the economic benefits that one can secure by using political power.
 Allow a free media to flourish

17. Chapter 12: The Vicious Cycle
 Extractive political institutions lead to extractive economic institutions
 Enrich a few at the expense of many
 Create the platform for extractive political institutions to persist
 Provide no checks against abuses of power
 Creation of unconstrained power and great income
 Inequality increases the potential stakes of the political game

18. Chapter 13: Why Nations Fail Today
 Institutions, Institutions, Institutions
 Extractive economic institutions do not create incentives
 Extractive political institutions support economic institutions
 Extractive economic and political institutions are root of failure

19. Chapter 14: Breaking the Mold
 Vicious circle and extractive institutions can be replaced by inclusive institutions
 Examples of China, Botswana and the U.S
 Glorious Revolution in England

20. Chapter 15: understanding prosperity and
Poverty
 Explains huge differences in living standards around the world
 Differences in living standards are a result of distinction between extractive and
inclusive economic and political institutions
 Growth in extractive economic and political institutions is possible, but it is not
sustainable

21. Thesis of the Authors (1/2)
 Economic prosperity depends upon institutions
 Political institutions
 Economic institutions
 Further divided into two categories
 Inclusive political and economic institutions
 Extractive political and economic institutions

22. Thesis of the Authors (2/2)
 Virtuous circle strengthens inclusive institutions
 Viciuous circle strengthens extractive instututions

23. Analysis
 Not purely economic theory
 General reader can understand it
 Explains huge swathes of human history
 Use of multiple historical examples to show institutional developments
 Balance between the logic of political and economic behavior
 Use of maps and pattern
 Structurally well written book

24. Shortcomings(1/2)
 Fails to tell how nations can prevent the build-up of institutions that cause poverty
 Does not ponder upon the reasons of emergence of inclusive and extractive
institutions
 Ignores the role geography, culture and ignorance have to play in a Nation’s failure
or success.

25. Shortcomings(2/2)
 Growth cannot also sustain even under inclusive institutions.
 global financial meltdown of 2008
 Goes too far back in time in citing examples, reducing its relevance in current world
situations
 Use of too many historical examples makes the reading a little boring

26. Relevance to Pakistan(1/2)
 Extractive political institutions in Pakistan
 Monopoly of civil and military elite on politics
 Elections stregthen position of narrow elite
 Feudal lords use political institutions for their own benefit

27. Relevance to Pakistan(2/2)
 Foreign aid induced development benefits the rich
 Huge inflow during military dictatorship was not helpful
 Causes dependence on other countries