PROSPERITY OF NATIONS

The title of this writing can be written as “Why Nations Failed?”, but it would counter to my personal view that it is easier to say why nations fails, but a lot harder to define path to success or prosperity of nations.

One the theory proposed by Acemoglu and Robinson about why nations fails is because of existence of extractive political institutions, which in turns breed extractive economic institutions. Both went into a vicious cycle that eventually leads to the doom of the nations. The theory has lots of logic and meaningful ways of looking at the subject, and really worth studying further. 

How nations could get out of such predicaments if they could have check and balance among the major institutions such as the independence of judiciary and media as the two most important ones, followed by a liberalized economy with strong protections of property rights, and major detachments between politics and economy. To achieve such positions would be a major challenge, since the incumbents would try any forms of resistance to resist any changes that leads to such conclusions. The presence of such entities, would create to what is termed as “creative destruction process” (borrowing from Joseph Schumpeter’s term), where once it happened, there will be irreversible process destruction of old systems and regenerations and rebirth of new set-ups and institutions.

Learning from the last 200 hundred years of history since industrial revolutions, we can see that nations, at the time of industrial revolutions started relatively on almost the same footing (economically), but due to the changes in the political landscape to some, and while others are not; the two nations of comparable, took different path and 100 years later, will look totally different from every possible aspect. Such are the fate of prosperity of nations.

Let us ask the same thing about ASEAN Nations. Malaysia, Indonesia, Singapore, Philippines,Thailand, Myanmar – all started about the same post WWII. But if we compare today the fate of these nations – they are all of far difference from each other. The question is why and how? What path did these countries took that made them different from each other today. Singapore grown by leap and bounds; Malaysia grown somewhat well, Indonesia is moving, Thailand is struggling, and Philippines are still languishing. How come countries that start the race together end up on different positions after almost 60 years later?

This is the question that I will try to address, learning from the theory proposed by the authors

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