Common Shocks, Different Outcomes.

The figure is from a review of Why Nations Fail and Pillars of Prosperity. The review is by McLeod (Journal of Economic Literature, March 2013).

"Why Nations Fail" and Ideology

What I really like about Why Nations Fail is the large number and diversity of well crafted cases on how institutions are important for prosperity or economic failure. The cases are rich geographically and chronologically.

One theme that receives little attention in the book (and the authors accept it) is ideology. For instance, in the discussion of Guatemala the authors do not mention the foreign intervention that led to the killing of Guatemalan President Jacobo Arbenz in 1954. Also, in the case of the Congo there is no discussion on the killing of first-elected Prime Minister Patrice Lumumba in 1961. One can think that these events were beneficial, or that they were very harmful for democracy in these countries. But the issue remains that ideology is an important force behind development trajectories [and ideological forces do not necessarily come from within]. The question is: what is the relative importance of incentives versus ideology in the failure and success of nations? [Of course ideology is complex, it can be a very good, or a very bad thing].
Arbenz (from Wikipedia)

Lumumba (from Wikipedia)

One sentence

The fear of creative destruction is the main reason why there was not sustained increase in living standards between the Neholitic and Industrial revolutions.

 Why Nations Fail (p. 154-55).