E10 — The Diffusion of Prosperity: Institutional Paths and Diverging Outcomes

Why did prosperity take root in some places and not others? In this episode of Why Nations Fail — A Deep Dive into Acemoglu & Robinson’s Theory, we explore Chapter 10, which focuses on how inclusive institutions spread — and why they didn’t everywhere. The authors contrast the development paths of countries like Australia and the United States, where labor shortages and settler colonialism helped foster inclusive institutions, with regions where absolutism and extractive systems persisted. We also examine the ripple effects of the French Revolution, the transformative impact of Japan’s Meiji Restoration, and the missed opportunities in China and Eastern Europe. These examples show how a nation's trajectory hinges on both historical moments and the institutional responses to them.