RE-DESIGN Posts

Francis Fukuyama reviews Why Nations Fail, the new book by Daron Acemoglu and James Robinson, at his blog. The review is fairly critical. Fukuyama agrees that institutions are of paramount importance for development (as you would expect given his own recent book) but is unsatisfied with the vague (or even missing) definitions of the two central concepts of the book – ‘inclusive institutions’ and ‘extractive institutions’. This conceptual stretching allows the labels to be applied quite arbitrarily to fit the argument of the book. In substantive terms the critique boils down to the question whether democratic (inclusive) institutions are necessary for stable economic development. In Fukuyama’s view they are not (think contemporary China) and might even be counterproductive (following Huntington). In Acemoglu and Robinson’s view, democratic political institutions and inclusive economic institutions are indispensible for sustained long-term development. Fukuyama’s quibble with Why Nations Fail fits into a line of argumentation he is in the midst of constructing which can be summarized as ‘good governance is necessary for development but democracy is not necessary for good governance’. His latest project, for example, is to develop a new conceptualization and measurement of governance which moves away from the traditional indicators of (Western-style) rule of law and democratic accountability. Here is a characteristic quote from the project’s announcement: One can think of many ways in which greater democratic participation actually weakens the quality of governance.   Acemoglu and Robinson respond to Fukuyama’s review at their own blog. But in my opinion Fukuyama’s general critique (and his smaller points…