Jopie Fourie
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- Aug 30, 2019
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We must go beyond institutions and interrogate the role of human beings within them
On a recent business trip, as is often the norm, I packed as part of my reading material a few books which I felt were necessary not only to juxtapose the current world situation in terms of economic growth (or lack thereof), rising unemployment and trade wars, but also to gather from other minds insights as to why some things, particularly in the modern international political economy, seemingly unfold in the manner in which they do.
But further, to understand from the viewpoint of other nations’ perspectives what constitutes ongoing exponential growth of other countries, while some seem stuck in regression.
Coincidentally, one of the books I packed was one I had read a few years back, by Daron Acemoglu and James A Robinson, titled Why Nations Fail.
In this book, the two argue that the most common reason for nations’ failures today is that they have extractive institutions.
They contend that nations fail because their extractive economic institutions do not create the incentives needed for people to save, invest and innovate.
Extractive political institutions support these economic institutions by cementing the power of those who benefit from the extraction.
They argue that extractive economic and political institutions, though their details vary under different circumstances, are always at the root of this failure.
In many cases the failure takes the form of a lack of sufficient economic activity, because politicians are only too happy to extract resources or quash any type of independent economic activity that threatens themselves and the economic elites.
And I was going through this literature for the second time, only this time around I was reading it against the backdrop of the recent release of the National Treasury’s economic strategy discussion document.
I found myself breathing a sigh of relief at the realisation that, despite our own misgivings and growing pains, we stand in direct contrast to why nations fail, if Acemoglu and Robinson’s contentions are anything to go by.
Why do nations fail? And is SA in danger of failing? | Citypress
We must go beyond institutions and interrogate the role of human beings within them.