Why Nations Fail

Why Nations Fail

answer the questions and make a question about it

-Why Nations Fail, Chapter 1 “So Close and Yet So Different”

1. In the first section of this chapter (The Economics of the Rio Grande), the authors compare Nogales, Arizona, USA to Nogales, Sonora, Mexico. The authors posit, and then reject, several hypotheses for the stark differences in living standards in these two cities. What are these hypotheses? What do the authors settle on as a fundamental explanation for the differences?
2. Early in the chapter (pg. 9), the authors note that inhabitants of Nogales, Arizona have access to, “…economic institutions which…encourage their employers to invest in the best technology, which leads to higher wages for them.” How does having access to technology lead to higher wages? Provide examples for when this does and does not occur.
3. How do differences in the general colonization patterns in South America v. North America give rise to differences in the living standards of those in Nogales, Arizona versus Nogales, Sonora?
4. Bill Gates and Carlos Slim are two of the richest people in the world. Contrast the two paths they took toward wealth. How can it be that “Carlos Slim has the power to get what he wants. Bill Gates’s power is far more limited.”

Solution Preview

1.  In the first section of this chapter (The Economics of the Rio Grande), the authors compare Nogales, Arizona, USA to Nogales, Sonora, Mexico. The authors posit, and then reject, several hypotheses for the stark differences in living standards in these two cities. What are these hypotheses? What do the authors settle on as a fundamental explanation for the differences?

While the residents in Nogales, Arizona tend to take for granted public services offered by their institutions, they are better compared to the residents in Nogales, Sonora. At this part of the border, residents have a low-income average that is one-third that of Nogales, Arizona, most adults do not have a high school degree, teenagers have no access to education, mother’s worry of the high infant mortality rates, poor public health conditions and lack of access to public amenities (Acemoglu & Robinson, 2013).

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