WHY SOME COUNTRIES GROW AND OTHERS DON’T

Nations prosper when their institutions allow individual ability to become collective progress, argues** LINUS OKORIE**

Every nation has resources. Some have abundant natural wealth; others possess little beyond the ingenuity and determination of their people. Yet some countries turn their resources into lasting prosperity, while others remain trapped in cycles of poverty, instability and unrealized potential.

The difference is rarely explained by resources alone. It has much more to do with the rules that govern a society, the institutions that enforce them and the choices made by those who hold power.

In Why Nations Fail, economists Daron Acemoglu and James Robinson make a compelling argument: nations prosper when their institutions create opportunities for people to work, invest, innovate and participate in economic life. They struggle when institutions are designed primarily to protect the interests of a privileged few.

This argument has profound implications for leadership. A nation’s future depends not only on the quality of its leaders, but also on whether those leaders are willing to build systems that remain effective beyond their own tenure.

Consider Nogales, a town divided by the border between the United States and Mexico. On the American side, residents generally enjoy higher incomes, better public services and stronger economic opportunities than their counterparts on the Mexican side. The two communities share a geographical setting and many cultural similarities, yet their economic experiences differ considerably.

Geography and history still matter, but the institutional differences help explain much of the divide. Can people trust the courts to enforce contracts? Can entrepreneurs build businesses without fearing arbitrary seizure? Can citizens hold public officials accountable? Can individuals expect their efforts to translate into opportunity?

These questions shape the decisions people make every day.

A business owner is more likely to invest when property rights are protected. A farmer is more likely to improve production when the returns from that investment are secure. A young person is more likely to develop valuable skills when the economy offers a credible opportunity to use them.

Where institutions protect effort, people are encouraged to build. Where institutions make success vulnerable to arbitrary power, people become cautious, move their resources elsewhere or leave altogether.

Prosperity grows when people have good reason to believe that their effort will be rewarded.

History offers a powerful example of what happens when political power is subjected to institutional constraints. England’s Glorious Revolution of 1688 helped establish a political settlement in which the Crown’s authority was increasingly constrained by Parliament. The transformation was neither immediate nor perfect, but it contributed to a system in which taxation, property rights and government authority became more predictable.

That predictability mattered economically. Merchants, manufacturers and investors could make longer-term decisions with greater confidence that their investments would not depend entirely on the preferences of the monarch.

The lesson is not that the leaders involved were motivated solely by public interest. They were political actors with competing interests. What mattered was that the resulting settlement placed greater limits on the exercise of power.

This is one of the most difficult tests of leadership: the willingness to accept constraints that may limit one’s own authority.

The challenge is that leaders often benefit personally from the very systems that prevent their societies from progressing. Open competition creates opportunities for new businesses. Merit-based appointments allow talented people outside established circles to rise. Independent institutions make it harder for powerful individuals to act without accountability.

For leaders who value control above progress, these developments can feel threatening.

The Austrian emperor Francis I, for example, resisted the introduction of railways in his territories partly because of concerns about the social and political disruption they might cause. Such resistance illustrates a recurring problem in history: those who control a system may fear the changes required to improve it.

A country can lose years of progress when its leaders prioritise preserving their position over expanding their people’s opportunities.

The choices leaders make become particularly consequential during periods of crisis. Acemoglu and Robinson describe such moments as critical junctures: periods when major disruptions weaken existing arrangements and create opportunities to establish new ones.

The Black Death of the fourteenth century provides a striking example. The pandemic killed a substantial proportion of Europe’s population, leaving many landowners with fewer workers to cultivate their land.

In parts of Western Europe, the resulting labour shortages strengthened workers’ bargaining power and contributed to the weakening of serfdom. In parts of Eastern Europe, landowners responded by tightening restrictions on labour, reinforcing systems of control.

The shock was similar, but the institutional responses differed.

This is an important lesson for contemporary leaders. A crisis does not automatically produce progress. It exposes the strengths and weaknesses of existing systems and forces decisions that may shape an organisation or nation for generations.

Economic downturns, technological disruption, public health emergencies and political transitions can become opportunities for reform. They can also become excuses for concentrating power, protecting vested interests and postponing necessary change.

The difference lies partly in what leaders are willing to learn, what interests they are prepared to challenge and which institutions they choose to strengthen.

China presents a more complicated case because its extraordinary economic transformation challenges any simplistic explanation of national prosperity.

Beginning in 1978, under Deng Xiaoping, China introduced reforms that expanded economic incentives, encouraged experimentation and opened parts of the economy to foreign investment. Farmers gained greater freedom to benefit from production, special economic zones attracted investment, and successful approaches were expanded.

The results were remarkable. According to the World Bank, China’s development since 1978 lifted close to 800 million people out of extreme poverty.

One of the most instructive features of this transformation was its experimental approach. Rather than attempting to redesign the entire economy in one move, reformers tested policies in selected areas, examined the results and expanded approaches that worked.

This is an important leadership principle: when the right answer is uncertain, the ability to test, learn and adapt can be more valuable than the pretense of having all the answers.

Yet China’s experience also raises a difficult question. How sustainable is economic progress when political power remains highly concentrated and independent mechanisms for challenging decisions are limited?

China has demonstrated considerable state capacity and an ability to adapt economically. At the same time, its political system illustrates the risks of relying heavily on the judgement of those at the top.

Rules can be changed, institutions can be weakened and policies can persist longer than their usefulness warrants when meaningful checks on power are inadequate.

The lesson is not that every country must follow an identical political or economic model. It is that growth and institutional resilience are different achievements.

A country has not secured its future merely because it has grown. It must also build the capacity to correct its mistakes and withstand poor leadership.

South Korea and Taiwan offer another perspective. Both industrialized rapidly under strong, often authoritarian governments that invested heavily in education, reformed land ownership and pushed businesses to compete in export markets. Both later opened their political systems, developing more competitive elections and freer courts and press, and both remain prosperous.

Their experiences demonstrate that industrial development requires more than political declarations. It requires investment in people, productive enterprises, technology and the conditions that allow businesses to compete. Their subsequent political transitions also highlight the importance of institutions that can accommodate broader participation and hold those in power accountable.

Botswana offers a particularly instructive example for Africa.

At independence in 1966, Botswana was among the poorest countries in the world. Its subsequent discovery and development of diamond wealth created a significant economic opportunity. But natural resources alone do not explain its development.

Under its first president, Seretse Khama, Botswana maintained a multiparty political system and built on consultative traditions, including the

kgotla, a community assembly where people could discuss issues affecting their communities. The country also established arrangements through which mineral revenues could support national development.

These choices helped distinguish Botswana from countries where natural wealth became primarily a source of private enrichment, political competition or conflict.

Botswana has faced serious challenges, including inequality and its vulnerability to dependence on diamonds. Its experience should not be romanticized. Nevertheless, it demonstrates an important point: natural wealth creates an opportunity, but institutions and leadership decisions influence how that opportunity is used.

The resource is an advantage. The management of the resource determines how much of that advantage reaches the people.

The same principle applies to oil-producing nations, including Nigeria. Oil can generate revenue, but revenue does not automatically produce reliable electricity, quality education, effective healthcare, productive industries or secure livelihoods.

Those outcomes depend on how revenue is governed, how public money is allocated, whether institutions are accountable and whether economic policy encourages productive activity beyond the extraction of natural resources.

Nigeria’s development challenge cannot be explained by a single factor. Geography, infrastructure, security, education, economic policy and historical circumstances all matter. But institutional quality and leadership choices remain central to whether these challenges are addressed effectively.

Consider the experience of a small business seeking to expand. Its ability to create jobs depends not only on the entrepreneur’s competence, but also on access to finance, reliable power, predictable regulation, functioning transport networks and confidence that contracts will be honored.

When these conditions are weak, businesses spend valuable time and money navigating obstacles rather than improving products, increasing productivity or employing more people.

The consequences extend beyond business owners. Workers lose opportunities, consumers face higher costs, and young people may conclude that their best prospects lie elsewhere.

The same institutional questions apply to public administration. Are appointments based on competence and performance? Are public projects evaluated by their results? Can officials be held accountable for repeated failures? Do policies survive political transitions, or does every new administration feel compelled to start again?

These are not merely administrative questions. They determine whether national effort accumulates into progress or is repeatedly lost.

Nigeria does not lack intelligent people, entrepreneurial ambition or examples of individual excellence. The deeper challenge is building systems that allow these strengths to produce consistent results at scale.

A country cannot depend indefinitely on exceptional individuals compensating for weak institutions. It must make effective performance more normal and failure more difficult to conceal.

That requires leaders who are willing to strengthen institutions, encourage productive competition, protect public resources and build systems that do not depend entirely on their personal presence.

Placed side by side, these national experiences do not tell one simple story. Geography and history matter. So do industrial and trade policies, education, infrastructure and state capacity. China’s growth, for example, cannot be explained by the same factors that shaped Botswana’s development. South Korea and Taiwan followed paths that differed from England’s historical experience.

Yet a pattern runs through these cases. Where institutions protect productive effort, support investment and permit societies to adapt, talent has more room to flourish. Where rules primarily serve those who hold power, growth becomes more difficult to sustain, however impressive the initial progress may appear.

This argument extends beyond national politics. A company, a professional body, a town union or a social club is also an institution, and each faces a version of the same challenge.

Organizations endure when members trust the rules, roles are clear, merit is recognized, succession is orderly and people have a meaningful opportunity to contribute. A leader who is indispensable may appear powerful, but an organization that cannot function without that leader has a serious weakness.

A leader who prepares others to lead, preserves institutional knowledge and accepts being questioned is building something more durable. Associations are particularly important because they are places where people learn the habits of effective institutions: how to elect officers, disagree without destroying relationships, hold positions of responsibility and eventually hand them over.

These habits may appear small, but they shape the broader culture of leadership within a society.

The question, therefore, returns to the responsibility of the individual leader. What are we building that will continue to serve people when we are no longer in charge? Are we creating institutions that reward competence and protect the collective interest, or systems that depend on our personal influence? Are we preparing the next generation to improve what we have built, or making them dependent on us?

The answers matter because nations do not prosper simply because they have capable individuals or valuable resources. They prosper when their institutions allow individual ability to become collective progress.

The border at Nogales was never simply a line between two peoples. It represented a deeper divide between different institutional arrangements and the choices made by generations of leaders.

Ultimately, the difference between countries that grow and those that do not is shaped by many forces. But one distinction remains decisive: whether leadership builds systems that serve the people and endure beyond the individuals who control them.

The true measure of a nation’s leadership is not merely the progress it records under one leader, but the capacity it builds to keep progressing after that leader is gone.

Okorie MFR is a Leadership Development Expert