Chapter 2 - Theories that don't work

In this chapter, there are three types of theories mentioned that are meaningless to explain the different prosperity of each country.

First theory is the Geography Hypothesis. This theory claims that the great divide between rich and poor countries is created by geographical differences, for example, climate, terrain and etc. However, this book reveals that this theory is not correct. It says that the difference between countries is not determined by geographical factors, but by institutional factors. It also claims that there is no such historical evidence that can prove the different prosperity between countries are created by geographical factors. For example, Africa is relatively a poor country than other countries. Many people die of hunger and diseases. Some people might think that it is diseases that makes the country poor, however, on the book, it concludes, "Disease is largely a consequence of poverty and of governments being unable to or unwilling to undertake the public health measures necessary to eradicate them."

Second theroy is the Culture Hypothesis. This theory consists of the changes of countries are mostly determined by their religion and nationalism. There is a clear explanation that proves the Culture Hypothesis is wrong in this chapter. Let's take an example of South and North Korea. South Korea is relatively richer than North Korea, and their cultural norm and religions are different from North Korea. South Korea preserved the cultural norm from the past, while North Korea do not. South Korea has free of religion, but North Korea do not allow people to have any religion. However, these differences of cultural norms and religions cannot be an evidence that shaped the differences between those two countries, because both countries had exactly the same culture and religion before they were splited. The differences between those two halves were gradually created after they were divided.

Final theory is Ignorance Hypothesis. This theory bascially saying that it is the leader who makes the country poor or prosper. However, it is quite dangerous to say, because it is true that if the president of a country is a capable leader, the country can prosper, however, they mostly get advise from elite economists. Therefore, even a good leader can make the country poor by others around.