Why Nations Fail: The Origins of Power, Prosperity, and Poverty

Chapter 10 explores how inclusive institutions spread to various parts of the world, generating economic growth and prosperity. The chapter starts with the story of British convicts being sent to Australia, focusing on the case of married couple Henry and Susannah Cable. Their legal victory in Australia against Captain Duncan Sinclair marks a divergence from British law, signaling the start of Australia’s path toward more inclusive institutions.

The chapter then describes the evolution of penal colonies in Australia. Initially, convicts were forced into labor without pay, but due to the ineffectiveness of this system, they were eventually allowed to work for themselves after completing assigned tasks. This shift toward giving convicts incentives led to an increase in production and the gradual development of more inclusive economic practices.

In Europe, the French Revolution helped dismantle absolutism and spread inclusive institutions across the continent. The revolution abolished feudalism, introduced equality before the law, and removed privileges of the nobility and the clergy in France. These reforms catalyzed economic and social transformations in the country, and other parts of Europe were influenced by the revolution.

In Asia, the paths of China and Japan diverged in response to the challenges of the 19th century and the Industrial Revolution.