Why Aren't They Better Policies?

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Yam: It's not so much that they don't know what the best policies are. They've got certain public choice andan institutional barriers, which don't to the outsideor especially to the international economist who says al this is easy to fix. The second part of the theory is about why are these institutional differences there in the first place? And there it's where we argue it's really conflict of interests, that of people who control power as politicians or as leaders,. Yam: To argue that it's more structural factors, we need to look at other historical episodes.

Daron Acemoglu of MIT and author (with James Robinson) of Why Nations Fail talks with EconTalk host Russ Roberts about the ideas in his book: why some nations fail and others succeed, why some nations grow over time and sustain that growth, while others grow and then stagnate. Acemoglu draws on an exceptionally rich set of examples over space and time to argue that differences in institutions--political governance and the inclusiveness of the political and economic system--explain the differences in economics success across nations and over time. Acemoglu also discusses how institutions evolve and the critical role institutional change plays in economic success or failure. Along the way, he explains why previous explanations for national economic success are inadequate. The conversation closes with a discussion of the implications of the arguments for foreign aid and attempts by the wealthy nations to help nations that are poor.