Reader Comment on Foreign Interventions
Tuesday, March 27, 2012
Daron Acemoglu and James Robinson

One of our readers sent the following comment:

In your book, you ignore the intricacies of international relations. The reason Latin America is so poor today is not due to colonial history, but recent U.S. foreign policy. It is no secret that the United States supported dictators like Batista (Cuba), Banzer (Bolivia), and Armas (Guatemala), so that American corporations could prosper in Latin America. 

This is the reason Africa and Latin America are so poor; aggressive U.S. foreign policy gave them bad institutions. Could it be then that the United States has very extractive institutions - not domestically, but internationally?

This comment raises an excellent point, which is perhaps insufficiently discussed in the book. The book gives several examples of extractive institutions set up by the British as they were establishing their inclusive institutions domestically. Much of this is discussed in Chapter 9, for example, in the context of British policies in South Africa and Rhodesia. The same themes can be seen from the discussion of British plans to set up an extractive penal colony in Australia (Chapter 11) and from the colonization of North America (Chapter 1). There should be nothing surprising here. Domestic inclusive institutions provide safeguards against elites enriching themselves at the expense of the population that has political voice, but provide little protection for the voiceless — put differently, it is just a question of who is included. So it should be no surprise that the French Revolution and Napoleon tried to suppress the Haitian revolt and reinstitute slavery, and British merchants benefited from Caribbean slavery.

It is also true (but discussed only in passing in the book) that the US supported some highly extractive regimes, partly in the context of the Cold War (e.g., Pinochet’s dictatorship in Chile and Zaire under Mobutu) and partly to protect major economic interests (e.g., Guatemala and Iran). Undoubtedly, this has contributed to the persistence of extractive regimes in certain countries.

That being said, it is difficult to pin all the blame on US foreign policy, since even in places without US intervention extractive institutions from colonial times and thereafter have persisted into the 20th century. In the context of Africa, for example, most rapacious regimes emerged and wrought havoc without any outside assistance (e.g., as we argued in this paper).

Article originally appeared on Why Nations Fail by Daron Acemoglu and James Robinson (http://whynationsfail.com/).
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