Why Nations Fail Illustrated

Lecture 1: Introduction

October 2, 2018

Masayuki Kudamatsu

This course in a nutshell

"A history of the world, but not a typical one" (BBC History Magazine)

Causes of income inequality

across countries

Economics as a tool to

understand politics & economy

Value of a concept

to see the world

With this book, we will learn 3 things:

1

2

3

This course in a nutshell (cont.)

Today's Road Map

Theory proposed by Why Nations Fail

Footnotes on institutions, drivers of economic growth,

and what economics is like

Course schedule

Income inequality across countries

Class discussion

Grading policy

Online discussionboard

Term paper

1

2

3

4

Wait, who is the instructor of this course?

Who am I ?

Born and bred

in Tokyo

Study PhD in economics

at London School of Economics

2002-07

Do research

at Stockholm University

2007-15

What did I research?

Democracy in Africa

helps more babies survive

Connections

AND good job performance

promote politicians in China

Democracy in Africa

helps more babies survive

Connections

AND good job performance

promote politicians in China

Research agenda pursued by

the authors of Why Nations Fail

very closely related to

these pieces of my research

Today's Road Map

Theory proposed by Why Nations Fail

Footnotes on institutions, drivers of economic growth,

and what economics is like

Course schedule

Income inequality across countries

Class discussion

Grading policy

Online discussionboard

Term paper

1

2

3

4

Meet the authors of Why Nations Fail

James A. Robinson

Listen to his TED talk on the book until 2'37''

Class discussion time

Why do we see

such a big difference

in living standards across countries?

Having your own answer

will help you understand the reason proposed by Why Nations Fail.

Jim's answer (part 1)

What cannot be an answer?

Continue listening to his TED talk on the book until 4'06''

Jim's answer (part 1)

It's NOT because

poor countries

cannot afford

technology,

education,

or infrastructure

Money is

simply wasted

Today's Road Map

Theory proposed by Why Nations Fail

Footnotes on institutions, drivers of economic growth,

and what economics is like

Course schedule

Income inequality across countries

Class discussion

Grading policy

Online discussionboard

Term paper

1

2

3

4

Jim's answer (part 2)

Continue listening to his TED talk on the book until 9'19''

Theory proposed in Why Nations Fail

Jim's answer (part 2)

Example

Incentive & opportunities

for everyone to innovate

Patent given to people with various backgrounds, both rich and poor

Economic institutions

how society is       

organized for

economic activities

Income inequality across countries

A concept proposed by Douglas North

(Nobel laureate in 1993)

Footnote 1: Institutions

"humanly devised constraints that structure political, economic and social interactions"

e.g.

When college graduates find a job

Japan

before graduation

Most countries

after graduation

Douglas North (1991) Institutions, p. 3

vs

Footnote 1: Institutions (cont.)

This question has been the research agenda

pursued by the authors of Why Nations Fail for past 20 years

Institutions

Economic performance

?

Footnote 2: Drivers of Economic Growth

People need to have an incentive to invest and innovate

e.g.

Do you want to set up a firm to sell your innovative products?

Economic growth

Investment

Innovation

Jim's answer (part 3)

Continue listening to his TED talk on the book until 13'23''

Theory proposed in Why Nations Fail

Jim's answer (part 3)

Broad Distribution

of Political Power

Strong

State Capacity

Economic Institutions

Political Institutions

+

Incentive to

Invest

&

Innovate

Meet the authors of Why Nations Fail

Daron Acemoglu

The first 45 seconds of this interview

summarizes what we've learned so far

Footnote 3: What is economics?

Today's Road Map

Theory proposed by Why Nations Fail

Footnotes on institutions, drivers of economic growth,

and what economics is like

Course schedule

Income inequality across countries

Class discussion

Grading policy

Online discussionboard

Term paper

1

2

3

4

Course schedule

The sequence of chapters in Why Nations Fail

is a bit hard to follow

I've reshuffled the sequence as follows

Weeks 2-4: How institutions affect prosperity

October 9

Chapter 3

October 16

Chapter 7

October 23

Chapter 8

North/South Korea

the Congo

How institutions matter for prosperity

Why did

Industrial Revolution

take place

in England?

History of England

from 13c to 19c

Extractive institutions cause poverty

Inclusive institutions lead to prosperity

Ottoman Empire

Austria-Hungary

Russian Empire

Ming/Qing dynasties

Ethiopia

Somalia 

October 30

Chapter 4

November 6

Chapter 1

November 13

Chapter 10

United States

vs Mexico

from colonization

to early 20c

Weeks 5-7: Origins of inclusive institutions

Western

vs Eastern Europe

after Black Death

in 14c

 

Spain vs England

after Rise of Atlantic

Trade in 16c

Australia

 

French Revolution

and its spread to

Western Europe

 

Japan vs China

in 19c

December 4

Chapter 13

Weeks 8-10: Persistence of Extractive Institutions

November 20

Chapter 9

November 27

Chapter 12

Colonization of

Southeast Asia by

Europeans in 17c

Slave trade in

sub-Saharan

Africa

British colonization

of South Africa

in 19c

Guatemala

Sierra Leone 

Ethiopia

before/after

the 1974 coup

US South

before/after

American Civil War

Zimbabwe

Argentina

Colombia

North Korea

Uzbekistan

January 8

Chapter 6

December 11

Chapter 14

United Kingdom

in 19c

 

United States

in early 20c

Republic of Venice

 

 

Roman Republic

Weeks 11-13: Survival of Inclusive Institutions

Botswana

 

 

US South

in the 1950s and 1960s

 

Brazil

since the 1970s

December 18

Chapter 11

Weeks 14-15:

Prosperity without Inclusive Institutions?

Soviet Union

 

Neolithic Revolution

 

Mayan city-states

January 22

Term paper workshop

January 15

Chapter 5

Today's Road Map

Theory proposed by Why Nations Fail

Footnotes on institutions, drivers of economic growth,

and what economics is like

Course schedule

Income inequality across countries

Class discussion

Grading policy

Online discussion board

Term paper

1

2

3

4

Grades matter for your future

Historically,

college grades do not count at all

for job hunting in Japan

Not any more!

就活生が後悔する?「成績重視」の逆回転

日本経済新聞  May 16, 2018  

Also, your GPA does matter for studying abroad

Grading Policy

Term Paper (79%)

Participation in

Online Discussion

(21%)

S A B C F
90 or above 80-89 70-79 60-69 Less than 60

Online Discussion Board

We use Prulu.com

I've sent you an email invitation to join

Register with your email address

If you haven't received an invitation, email me at

kudamatsu@osipp.osaka-u.ac.jp

Announcements on the course will also be posted there

Online Discussion Board (cont.)

Post questions on the assigned chapter of Why Nations Fail

by 3 pm of each class date

Help Masa focus on where you get stuck during his lecture

Get used to reading a lot in English

Task 1

Stupid questions

are welcome!

Your grade will be based on

whether you post a question, not what you ask.

Online Discussion Board (cont.)

What's written in Why Nations Fail

may not make sense to anyboby.

Task 2

Answer the questions posted by other students

Good answers will give you bonus in your grade

Bad answers do not count

Posting an answer

is your "optimal" strategy (i.e. the best affordable choice)

"Teaching is the best way to learn"

Online Discussion Board (cont.)

Mistakes

do not count

In this course...

I want you to 

Fail gracefully

Because...

Grading Policy

Term Paper (79%)

Participation in

Online Discussion

(21%)

S A B C F
90 or above 80-89 70-79 60-69 Less than 60

Pick a country

And discuss whether 

Theory of Why Nations Fail can

explain economic performances

of the country of your choice

Term Paper

Causes of income inequality

across countries

Economics as a tool to

understand politics & economy

Value of a concept

to see the world

With this book, we will learn 3 things:

1

2

3

This course in a nutshell (cont.)

Solve a problem, not a quiz

College admission exam

You solved quizzes

There were always

the correct answers

Real world

You have to solve problems

No one knows

correct answers

A concept will help you solve a problem that has no correct answer

No exam. Term paper instead.

Therefore

Don't call me

"Sensei."

And

I might be wrong. You might know better.

We all strive to solve a problem.

Pick a country

And discuss whether 

Theory of Why Nations Fail can

explain economic performances

of the country of your choice

Term Paper

Pick a country

You cannot choose a country of another student's choice

First come, first served

Post which country you've chosen on Prulu discussion board

The following countries cannot be chosen

as discussed in detail by Why Nations Fail 

Argentina

Australia

Botswana

Brazil

China (except since 1979)

Colombia

DR Congo 

Ethiopia (except since the 1990s)

France

Guatemala

Japan

North Korea

Mexico

Russia (except since the 1990s)

Sierra Leone

Somalia

South Africa

United Kingdom

United States

Uzbekistan

Zimbabwe

Pick a country (cont.)

Term Paper Preparation

Last 30-45 minutes of each class

You'll have time to prepare for writing term paper​

Last 1 or 2 classes

You'll give a talk on your draft term paper

Learn the importance

of receiving feedback and revise your draft

Data for economic performance

Documentation on economic and political institutions

How to write paragraph essays

Practice applying the theory with Japan as an example

Email a PDF copy to kudamatsu@osipp.osaka-u.ac.jp by

9 am on

Wednesday 13 February

Last class

Exam period

22 January

29 January - 8 February

For your information: 

Submission Deadline

because I have to submit your grades by 20 Feb...

Your to-do list until next class

Register with Prulu, the course online discussion board

(Check your email invitation)

Pick a country for your term paper

and post it on Prulu

Read Chapter 3 (except the last section on pp. 91-95) 

and post questions on Prulu

1

2

3

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