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The Story of Failed States, Financial Crises, and the Wealth and Poverty of Nations: A Comprehensive Review

Bret Mitchell

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Published in The World S Banker: A Story Of Failed States Financial Crises And The Wealth And Poverty Of Nations (Council On Foreign Relations (Penguin Press))

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The World s Banker: A Story of Failed States Financial Crises and the Wealth and Poverty of Nations (Council on Foreign Relations (Penguin Press))

The World's Banker: A Story of Failed States, Financial Crises, and the Wealth and Poverty of Nations (Council on Foreign Relations Books (Penguin Press))

by Sebastian Mallaby

4.2 out of 5

Language	:	English
File size	:	1531 KB
Text-to-Speech	:	Enabled
Screen Reader	:	Supported
Enhanced typesetting	:	Enabled
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Print length	:	495 pages

In his book 'Story of Failed States, Financial Crises, and the Wealth and Poverty of Nations', William R. Easterly argues that the key to understanding the economic development of nations lies in the study of failed states and financial crises. Easterly draws on a wealth of historical and contemporary evidence to support his thesis, providing a comprehensive and thought-provoking analysis of the complex relationship between these two phenomena.

Easterly begins by defining failed states as those that are unable to provide basic services to their citizens, such as security, justice, and healthcare. He argues that failed states are often characterized by weak institutions, corruption, and violence. These conditions can make it difficult for businesses to operate, investment to flow, and citizens to prosper.

Financial crises, on the other hand, are characterized by a sudden loss of confidence in the financial system. This can lead to a collapse in asset prices, a sharp increase in interest rates, and a decline in economic activity. Financial crises can have a devastating impact on both developed and developing countries, and they can often lead to political instability and social unrest.

Easterly argues that there is a strong relationship between failed states and financial crises. Failed states are more likely to experience financial crises, and financial crises can lead to state failure. This relationship is due to the fact that failed states often lack the institutions and capacity to manage financial risks effectively. Additionally, financial crises can exacerbate the problems that already exist in failed states, such as corruption and violence.

The book provides a number of case studies to illustrate the relationship between failed states and financial crises. One of the most striking examples is the case of Argentina. Argentina experienced a severe financial crisis in 2001, which led to a collapse in the country's economy and a sharp increase in poverty. The crisis was caused by a combination of factors, including weak institutions, high levels of corruption, and unsustainable levels of debt.

Another example of the relationship between failed states and financial crises is the case of the Democratic Republic of Congo. The Democratic Republic of Congo has been plagued by conflict and violence for decades. The country has also experienced a number of financial crises, which have further exacerbated the country's economic problems. The most recent financial crisis occurred in 2016, which was caused by a sharp decline in the price of copper, the country's main export.

The book concludes by arguing that the key to preventing failed states and financial crises is to build strong institutions and promote good governance. Easterly argues that this requires a long-term commitment from both developed and developing countries. He also calls for a greater focus on the bottom billion, the poorest people in the world.

'Story of Failed States, Financial Crises, and the Wealth and Poverty of Nations' is a timely and important book. Easterly provides a comprehensive and thought-provoking analysis of the relationship between failed states and financial crises. The book is essential reading for anyone interested in economic development, international relations, or global politics.

Key Findings of the Book

Failed states are more likely to experience financial crises than other countries.
Financial crises can lead to state failure.
The relationship between failed states and financial crises is due to the fact that failed states often lack the institutions and capacity to manage financial risks effectively.
Financial crises can exacerbate the problems that already exist in failed states, such as corruption and violence.
The key to preventing failed states and financial crises is to build strong institutions and promote good governance.

The Bottom Billion

Easterly devotes a significant portion of the book to discussing the bottom billion, the poorest people in the world. He argues that these people are often trapped in a cycle of poverty and violence. Easterly calls for a greater focus on the bottom billion, and he argues that this requires a long-term commitment from both developed and developing countries.

The World's Banker: A Story of Failed States, Financial Crises, and the Wealth and Poverty of Nations (Council on Foreign Relations Books (Penguin Press))

by Sebastian Mallaby

4.2 out of 5