Economics & Finance / Macroeconomics / Economic Development & Transition

The Institutional Roots of National Rise and Fall: Why Nations Fail – This section explores how

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

Nobel Prize in Economics Papers Series： The Institutional Roots of National Rise and Fall: Why Nations Fail – This section explores how political and economic institutions determine a nation's prosperity or poverty. By contrasting inclusive institutions (such as those in the United States and the United Kingdom) with extractive institutions (such as those in Latin America, Africa, and North Korea), the author argues that sustainable growth is only possible when power and opportunity are widely distributed. Extractive institutions, where resources are monopolized by a small elite, often hinder innovation out of fear of “creative destruction.” The book cites numerous historical examples from ancient Rome and the Mayan civilization to the Industrial Revolution to demonstrate that geographical and cultural factors are not the core causes of wealth inequality. Ultimately, the article emphasizes that a shift in the structure of political power is the fundamental prerequisite for breaking the vicious cycle of poverty and achieving national development.