The importance of institutions in determining economic success and maintaining political freedom

Why Nations Fail and The Narrow Corridor by Daron Ademoglu and James A. Robinson

Daron Ademoglu and James A. Robinson were the winners of the 2024 Nobel Prize in Economic Sciences, “who have demonstrated the importance of societal institutions for a country’s prosperity”  Daron Ademoglu is an Institute Professor at MIT and James A. Robinson is one of nine University Professors at the University of Chicago.

Together in 2012, they published Why Nations Fail: The Origins of Power, Prosperity, and Poverty.  This book emphasized the importance of institutions as a major reason why some nations are rich and others poor.  That is, it is not so much geography and culture, but our man-made political and economic institutions that underlie economic success or failure.  This theme is supported with extensive historical evidence.  For example, Korea was once a remarkably homogeneous nation, yet the people of North Korea are now among the poorest on earth while those in South Korea are among the richest.

Then in 2019, they published The Narrow Corridor: States, Society and the Fate of Liberty.  This book, again with extensive historical examples, describes the importance of maintaining a proper balance between the state and society, the narrow corridor, to preserve freedom and avoid falling into either despotism or anarchy. This is an extension of their focus on the importance of institutions in determining economic success to their importance in maintaining political freedom.  

“What makes this a corridor, not a door, is that achieving liberty is a process: you have to travel a long way in the corridor before violence is brought under control, laws are written and enforced and the state starts providing services to its citizens.  It is a process because the state and its elites must learn to live with the shackles society puts on them and different segments of society have to learn to work together despite their differences.”  

Book review  of Why Nations Fail by the London School of Economics

“Striking historical examples are used to demonstrate the key importance of institutions, and to reject the explanatory power of geography and culture.”

Book  Review of The Narrow Corridor by Spectrum Magazine

“I think the authors did well with their balancing act — an apt metaphor, as the core of their thesis is that a good state requires a delicate and ongoing balancing act between the power and capability of the state, on the one hand, and the simultaneous power of society to hold the state in check and guarantee basic human rights and decent minimum standard of living for all citizens, on the other.”