Student’s Name
Course Name
Institutional Affiliations
Instructor's Name
Date
WHY STATES FAIL - THE ORIGINS OF POWER, PROSPERITY AND
POVERTY
Introduction
First, the geography hypothesis. A popular theory to explain the economic disparities
that occur in some countries around the world is due to differences in geography and climate
conditions. This theory holds that poor countries are generally located behind the southern
and northern lines of the earth, while rich countries are concentrated in temperate regions.
Countries with tropical climates must be poor because: First, tropical conditions are fertile
ground for many diseases such as malaria which disrupts health and has implications for low
labor productivity; Second, tropical soil is not suitable for farming. This theory, which is still
used today including by Diamond (2013) & Sachs (2006), is disproved by the rapid progress
of some tropical regions such as: Singapore, Malaysia, and Bostwana. Bostwana as one of the
prosperous countries in the African hemisphere is in contrast to several other African
countries, such as Congo, Zimbabwe, Siere Leone which are still suffering from prolonged
hunger (Darwin, 2017). This approach cannot be used as a basis for looking at the economic
disparities that occur in several countries. Second, the cultural hypothesis. This approach was
popularized by Weber (2002) in his famous book "The Protestant Ethic and The Spirit of
Capitalism". The Protestant work ethic opens up space for prosperity for Western European
countries that are open to advances in technology and information. Meanwhile, African
countries are still considered as civilizations that do not have a work ethic and reject
technological progress. The condition of China in the past with its Confucian values seemed
to be contrary to prosperity. However, this approach is rejected in Acemoglu and Robinson's
view. Again, they provide several examples that undermine cultural theory. South Korea and
North Korea were one unit that had the same culture before the civil war. But today, South
Korea is so prosperous that it contrasts with their brothers in the North who live in poverty.
Don't these two countries share the same culture? But why are their fates s o different. Or is
it that China, with its Confucian culture, has led the world economy in recent decades
(despite its imperfect economic and political system). Although Acemoglu and Robinson
basically appreciate this approach, they criticize it for its inability to explicitly address
economic disparities.
Third, the ignorance hypothesis. Inequality occurs because the leaders of a country do
not know how to prosper their people. This is the opinion of the proponents of this theory.
This approach is popularized by economists who argue that poor countries are victims of
market failure conditions due to the ignorance of economists and leaders who do not
understand how to make policies to prosper their people in the past. The condition of
prosperous countries is inversely proportional. They are rich because their economists and
leaders have the intelligence to make effective and efficient policies. Are the leaders of
African countries too stupid to lead their countries so that their countries become poor?
Again, Acemoglu and Robinson debunk this theory by citing the case of Ghana. The country
was one of the failed states after independence from the British colony. Ghana's Prime
Minister, Kwame Nkrumah, hired renowned economists as advisors, Tonny Killick and Sir
Arthur Lewis (Nobel laureate). But still Ghana is an example of a failed state. Not because of
stupid advisors, but Kwame Nkrumah deliberately made policies to maintain and capitalize
on political support for the continuation of his regime.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
Extractive and Inclusive Economic and Political Institutions
If the three approaches above fail to explain the gap between the rich and the poor,
what is Acemoglu and Robinson's answer? Simply put, they offer a classic approach, namely
the institutional approach. According to them, differences in welfare levels between countries
are caused by their economic and political institutions. Countries become prosperous because
they apply inclusive economic and political institutions. On the other hand, countries become
poor or fail because they apply extractive economic and political institutions.
Inclusive economic institutions provide guarantees of asset and property protection,
not only for the elite, but for all levels of society. Inclusive economic institutions open up
inclusive market opportunities. This means that people have many choices of jobs that suit
their abilities. Not only that, people are also given the space to be creative. Ultimately,
inclusive institutions pave the way to create the engines of prosperity: education and
technology. Economic growth almost always goes hand in hand with technological advances
that multiply people's output (labor) as well as land and capital (buildings, production
machinery etc.) (Acemoglu & Robinson, 2014). Simply put, an inclusive economy
encourages technological innovation, builds human resources through education, provides
space to discover and develop people's talents and skills. All of which are beneficial for the
improvement of a country's economy.
Similar to inclusive economic institutions, inclusive politics paves the way for
prosperity. Acemoglu and Robinson define inclusive political institutions as centralized and
diverse. Inclusive political institutions distribute power equally to all levels of society and do
not act arbitrarily. Inclusive politics will be a shield to block efforts by certain parties to
damage the system that has been built (Acemoglu & Robinson 2014). Inclusive political
institutions regulate the procedure for choosing government structures and their authority.
Political institutions regulate who has power and what that power is used for. They require
that inclusive political institutions exist in countries with centralized power. Some African
states have failed because of the power of fragmented groups. Power struggles occur
everywhere. Acemoglu and Robinson argue that when you combine rotten regimes,
exploitative elites, and self-serving institutions with a weak, decentralized state, you have a
recipe for poverty, conflict, and even complete failure. This is one of the causes of the failure
of several African countries. Inclusive economic institutions can only stand on the building
blocks of inclusive political institutions.
The previous section explained that countries prosper because they choose to practice
inclusive economic and political institutions. It is time to explain why countries fail with
extractive economic and political institutions. Extractive political and economic institutions
are strongly causal. Extractive political institutions give power to a small group of elites and
have weak control over the use of power (Acemoglu & Robinson, 2014, p. 86). Fukuyama
(2005) has asserted earlier that if a country is to prosper then the state must be strong and
power must be centralized. This means that power is not distributed to a small group of elites
to rule. As happened in Ghana, Congo, Simbabwe, Somalia, and several other African
countries that spent energy fighting between clans because of the lack of centralized state
power.
The absence of centralized power by the state will cause small elite groups to form
economic institutions to extract all resources in society. Where there are extractive political
institutions, there are extractive economic institutions. Extractive political institutions open a
wide gap by a small number of elites to design and organize political institutions according to
their tastes. So that in the end, extractive economic institutions will The question is whether it
is possible for inclusive economic institutions to exist under the auspices of extractive
political institutions, or vice versa?
Acemoglu and Robinson emphatically answer that extractive economic institutions
will not survive under inclusive political institutions. Conversely, inclusive economies cannot
support and be supported by extractive political institutions. The inclusive economy has a
huge potential to be dragged down by extractive political institutions so that it boils down to
an extractive economy that only benefits a small group of elites.
Acemoglu and Robinson note that it is possible for the economy to grow even in the
confines of extractive political institutions. According to them, there are 2 (two) scenarios:
first, even though economic institutions are extractive, economic growth can still occur if
elite groups directly channel their resources into productive activities that they control. For
example, the Caribbean islands in the 16th-18th centuries, despite exploitative regimes and
slavery, people were malnourished and died of exhaustion, but the Caribbean islands
remained a prosperous country because it became a sugar producer and exporter that served
the needs of the world market (Acemoglu & Robinson, 2014, p. 89). And there are other
examples of countries, including the Soviet Union and South Korea under General Park, that
thrived economically even under extractive institutions.
Why not choose prosperity?
It is logical to ask why poor countries do not choose the path to prosperity? Don't all
countries have the potential to go down that road? Questions that may be considered trivial
but require complex answers and analysis. Acemoglu and Robinson in their book try to
answer by doing research for about 15 years until this book was published in 2012 which was
translated in 2014. It is not wrong that everyone wants to have inclusive economic
institutions to bring prosperity. Any authoritarian or dictatorial leader would want his or her
country to prosper as much as possible.
One example of a country that did not choose the path of prosperity is Somalia. The
country, which is inhabited by many tribes, is always at war with each other. If a clan is in
power, its economy will flourish and make the clan even richer. The absence of political
centralization is due to the fear of change: clans, groups, politicians who capitalizing on
power tends to monopolize power and will certainly cause social jealousy in other clans,
leading to prolonged conflict (Acemoglu & Robinson, 2014, p. 92).
Historical factors, on the other hand, determine the prosperity or poverty of a nation.
The episode of a nation's journey becomes a momentum, no matter how small the event,
depending on how to respond to change. Acemoglu and Robinson recount a history that
changed the order of life in most regions of the world. The black death, or bubonic plague, in
1346 devastated every region it attacked. The pandemic led to a population shortage,
especially in European countries. In the 14th century, Europe was ruled by the feudal lords.
This organization was built on a strict hierarchical relationship between the king-nobles-
peasants. The king as the ruler of the land distributed it to loyal nobles in return for security
protection. Furthermore, the nobles exploited the peasants by being forcibly employed
without wages, and in certain circumstances were still subject to taxes and fines. Of course,
this social system is clearly very extractive (Acemoglu & Robinson, 2014, p. 103).
This changed after the pandemic ended after the 1500s. In Western Europe, labor
became scarce and the survivors demanded freedom from feudalism. In England, for
example, workers forced the monarchy to pass the Statute of Workers which automatically
stopped the exploitation of peasants. But this was not the case in Eastern Europe. Instead, the
landlords became increasingly exploitative of the peasants. The fate of Western and Eastern
European peasants was far different, even though they experienced similar events.
This historical factor makes Acemoglu and Robinson clearly note that historical
episodes are like a double-edged sword that can change the fate of a country. On the one
hand, it can open the door to freedom from the confines of extractive institutions and
stimulate the presence of more inclusive institutions. But on the other hand, it can also
strengthen the hegemony of extractive social institutions. So, a historical event will determine
the prosperity of a country depending on how to respond to the momentum of the event, even
a small event.
Critique of Acemoglu and Robinson
Institutions, institutions, and institutions. This is always the answer offered by
Acemoglu and Robinson when answering why some countries in some parts of the world are
prosperous and others live in poverty. Approach Acemoglu and Robinson's institutionalism
will address the macro issues. The institutional approach makes the state the main focus
along with the rule of law, procedures and formal organization of government. The
institutional approach always looks at the legal and historical aspects as described in their
book, which always starts the discussion by telling a historical journey.
The institutional approach will indeed answer every macro problem, but in this book,
Acemoglu and Robinson do not clearly explain how extractive institutions can produce
tremendous economic growth. China, for example, practices super extractive political
institutions yet its economy is number one in the world. An analysis that very hesitantly
predicts that if the system in China still remains extractive, then China's glory will not last
long. No theoretical approach was used to support their prediction. Only the historical events
of nations that were once victorious even with extractive institutions but eventually fell. In
addition, this book is also still not firm in its closing to provide solutions to the disparities
that occur between countries.
The next most fundamental weakness of this book is that Acemoglu and Robinson are
unable to present rigid indicators of what is meant by extractive and inclusive economic and
political institutions. Explanations that are still very floating without binding indicators, such
as the explanation of several countries that are considered to have inclusive political
institutions but are actually not very inclusive. What happened in America, which is
considered a mecca of democracy, was criticized by Levitsky & Ziblatt (2018) who
considered America an authoritarian country under Trump's leadership. Likewise, the
American political world is dominated by rich people. The last weakness is their inability to
explain why Indonesia, which has tended to have inclusive political institutions after the 1998
reforms, is unable to compete with several other Southeast Asian countries, such as Malaysia
and Singapore? These are some of the weaknesses of the theory presented by Acemoglu and
Robinson.
Despite its weaknesses, this book is a monumental work. This book has broken a
series of established theories that are often used to analyze the disparities that occur in this
world. The cultural, geographical and ignorance approach seems to be a myth in the view of
these two great scientists. A series of leading world scientists such as Jared Diamond, Francis
Fukuyama, Steven Levitt recognize the genius of the two economists who wrote this
masterpiece. Therefore, this book is a good read for students, academics, especially
politicians, and policy makers to learn how to prosper the nation.
