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Why Do Nations Fail? By Daron Acemoglu And James A. Robinson

1612 words - 7 pages


Why do nations fail? This is a topic of popular debate with many economists and a question many scholars have struggled to find an answer to. Global poverty is an issue that economists Daron Acemoglu and James A. Robinson investigate and provide an alternative insight for in their book: ‘Why Nations Fail’. Acemoglu and Robinson investigate inequalities that exist across countries and why nations are an epitome of success and others, failure. They come up with an alternative explanation for why standards of living differ across countries, and why a gap exists between the rich and poor. The book introduces an example of two cities that are separated by a border: Nogales, Arizona ...view middle of the document...

This report will investigate whether Acemoglu and Robinson’s thesis of institutions provides any insight for the performance of Nigeria’s economy. Nigeria is considered the largest economy in Africa. Despite being a lead exporter of oil, the World Bank has acknowledged Nigeria among the poorest countries in the world. The World Bank refers to Nigeria’s economy as a paradox: the country is wealthy, but the people are poor. If the wealth was used for the development of Nigeria’s people and productive use in the economy, Nigeria could have been a prosperous country. However, Nigeria is characterized with a complex political history, inequitable income distribution, an ailing economy and rampant corruption. Acemoglu and Robinson would state the issue does not lie in the geography of Nigeria, the culture or even the ignorance of policies that could help enrich Nigeria. According to Acemoglu and Robinson’s thesis, Nigeria is poor because those in power made choices that resulted in a great consequence: poverty (Acemoglu & Robinson 2012). Due to oil, there has been high economic growth in Nigeria, and this may be possible under extractive institutions. However, according to Acemoglu and Robinson, this growth is not sustainable (Acemoglu & Robinson, 2012). For economic success to occur in Nigeria the political institutions must be centralized and a democratic government must be practiced. Therefore, with respect to Acemoglu and Robinson’s thesis, Nigeria’s extractive political institutions reinforce Nigeria’s extractive economic institutions.

Nigeria Basics
Nigeria is officially called the Federal Republic of Nigeria with Goodluck Jonathan as its current president. Nigeria is a federal constitutional republic made up of 36 states. The states are divided into 774 local government areas (LGAs). The capital of Nigeria is Abuja and the largest city in the country is Lagos. Nigeria has a large population of 168.8 billion and a current GDP of $262.2 billion (The World Bank, 2014). Nigeria is the largest country in Africa and the 7th most populous country in the world. Nigeria has over 250 ethnic groups with the three largest groups being the Hausa, Yoruba and Igbo. The Majority of the population practice Islam or Christianity, and minority religions including Hinduism, Jainism and the Baha’i faith. Nigeria has the second largest economy in Africa and is considered an emerging market due to its abundance of natural resources. Nigeria is oil-rich and oil dependent country. It is 12th largest producer of petroleum in the world and the largest producer in Africa. Oil accounts for 90% of exports in Nigeria (The World Bank 2014). Agriculture employs 60% of Nigerians, and major agricultural products include cocoa, sugar cane, yams and cassava (The World Bank, 2014). In the 1960s, the agricultural sector was the major contributor for domestic production, employment creation and exports. Today, Nigeria is over-dependent on oil and has replaced the role of...

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