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Why This Book Matters:

Why Nations Fail discusses why some nations in today’s world prosper while others are stuck in a cycle of poverty.

The Big Takeaways:

  1. Differences in institutions cause the quality of living in different countries.
    1. If Having inclusive institutions ensures power-sharing between groups of people, which leads to a more economically balanced society.
  2. England developed these institutions centuries ago when they began colonizing the world.
    1. England’s quick industrialization gave them advantages over the rest of the globe.
  3. When power is centralized, it poses disadvantages to the country’s development.
    1. Economic growth is constrained when political leaders are afraid of creative losses.
  4. The cycle of poverty is created from extortion by institutions.
    1. This happens when leaders prevent development and try to centralize power.
  5. While growth from institutions rooted in extortion is possible, it is not sustainable.
    1. It’s not sustainable because these institutions don’t prove incentives correctly.

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