Why Nations

Fail
The Origins of Power, Prosperity and Poverty
What is it all about?

This book is a thorough study of the economic and

political systems of a wide variety of countries,
leaders as well as outsiders of the modern world.
The author makes an analysis of how certain
events have led countries to their present situation.
Why their rapid prosperity ended, how they
achieved an economic miracle or why a country
never managed to achieve development.
 Who are the authors?

Daron Acemoğlu - A native of a family of Turkish Armenians, he

has repeatedly been included in various prestigious rankings of the
world's leading economists.
James Robinson - an economist and political scientist. He is a
professor at the Harris School of Public Policy at the University of
Chicago.
Creative destruction

The term "creative destruction", invented by the economist

Joseph Schumpeter, plays a key role in this book and therefore
needs to be explained in more depth.
Creative destruction is the demolition of established practices
in order to make room for innovation, which is seen as the
driving force behind capitalism.
Extractive and Inclusive institutions

Inclusive institutions are institutions that encourage and

stimulate people to engage in economic activity, by realizing
their talents and skills
Extractive institutions support outdated industries which
give them profit while preventing the development of new
technologies.
In-depth analysis of the book’s
principles

1. Nations fail because of extractive institutions which prevent the whole

people from being involved in crucial political and economic decisions. A
court in which only the privileged can get their way, thanks to bribes or
flawed legislation, is an example of such an extractive institution.
2.Extractive institutions can generate limited wealth by distributing it to a
small number of people at the top. In addition, extractive institutions tend
to create monopolies. Therefore, e.i. are natural, logical and widespread
in history.
.
In-depth analysis of the book’s
principles
3. The only way to change these institutions is to force elites to create more
pluralistic or inclusive institutions.
4. Exactly to "force", because elites never give up their rights voluntarily.
The authors' main method is to compare living standards in different countries, and
then sort out what went wrong in the poor countries (why they failed) and what went
right in the prosperous countries.
How to abolish extractivity?

Elites have never voluntarily presented democracy to the masses, but

masses have forcibly taken away the right to participate in decision-
making from elites.
For example, the French Great Revolution brought much misery and
suffering, but it freed France and with it half of Europe from the shackles
of extractive institutions to progress
So close, but so different
The city of Nogales is divided in half by the wall. North of the wall is
American Nogales, where average income per family is $30,000 a year.
South of the wall is Mexican Nogales. The average family income there
is about $10,000.
Carlos Slim and Bill Gates
The book does a great job of showing how doing business in
different states with different institutions can vary.

Bill Gates and Carlos Slim are among the richest people in
their countries. However, their path to that status differs
dramatically
Multicultural Management and the book

Of course, the influence of a country's religion and traditions

also plays a key role in the creation of organizational culture.
However, in this presentation I would like to focus on the
influence of historic-institutional approach on the shaping of
organizational culture.
Multicultural Management and the book

Up to the present day, mass of people believe that the reason

for the different levels of development of businesses and
countries as a whole lies in religious/traditional reasons.
However, according to the authors, these people confuse the
cause and the effect
Multicultural management and the book:
Poland and Ukraine
Ukraine and Poland are both part of the Slavic culture. At the same time,
the rules of team management in these countries are completely different.

Poles pay much more attention to corporate parties and team building than
Ukrainians. Informal relationships between employees are common in
Polish companies.

In Ukraine, on the other hand, employees try to keep their distance from
each other outside of work and corporate parties are more likely to take
place on special festive occasions. This can be attributed to the way the
country was influenced by the Soviet model of life, in which bureaucracy
built clear discipline and personal boundaries.
North and South Korea
After WWII Korea was divided into two countries. Under
the influence of the Soviet Union and America.

Now South Korea is one of the most developed countries

in the world, North Korea is one of the poorest.
My Recommendation
 Thank you!
For your attention

Done by Denys Zaslavskyi

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