Why Nations Fail Intertwined with the Diamond Framework

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While the “diamond” framework and the “extractive vs inclusive” framework look to explain the reasons for some countries’ success and many others failure, these two systems take two different approaches to assess the same issues. The diamond framework offers a pillar-based structure where four aspects of a country’s entire system are examined to correlate a nation’s success, the extractive vs. inclusive framework is more of a two factor game theory model that comes from each nation’s elite class. In this game theory model, you look at two choices in two places, whether the political system and economic structure of a country is either extractive, as in catering to the elites for the benefit of those political and economic elites. Or if the country is inclusive, the political and economic systems are formatted so that there is opportunity for anyone to succeed. Since it’s a two-option system, the game theory model works for both factors and there often is a parallel correlation between the decisions made for politics and those made in the economy. On the other hand, the diamond could almost be seen as the optimal scenario generated from the game of inclusive vs. extractive. An inclusive political system could be interpreted as the same thing as an Enabling Political System, in that one could assume that only an political system that enables the transfer and development of power could be deemed inclusive. An inclusive economic system is the root of stimulating the other three pillars in the diamond framework. Effective financial systems allow for vibrant entrepreneurship and with both you have an inclusive economic system. An extractive economic system would seek to hinder wealth development outside of the existing elite and to keep the labor class immobile, would never instigate managerial and systems reforms. So while the two systems are similar, the

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