SUMMARY Geographically, Nogales in Arizona, USA, and Nogales in Sonoma, Mexico are in the same location. You'd think both cities would be the same if they also shared history and demographics. Yet Nogales, Arizona is prosperous and Mexican Nogales is the opposite. Is it because the United States can provide social services such as transportation, healthcare, and education? Or is it because Nogales, Sonoma, is corrupt and has a high crime rate? Daron Acemoglu and James A. Robinson, authors of Why Nations Fail, argue that this is because the United States has inclusive institutions and Mexico has extractive institutions. If inclusive policies generated prosperity, it would make sense to think that all nations should have such policies. Historically, when the Spanish arrived in South America, they enriched themselves at the expense of others. The impoverishment and enslavement of local people, leaders and governments changed over time, but the policies did not, so they did not encourage people to work hard enough to get out of poverty, fearing that the government would take everything at any time. In the United States, inclusive policies were developed as colonists were gradually granted rights and incentives to work. Acemoglu and Robinson developed three different theories that could explain global inequality, but in reality they do not. The first is the geographic hypothesis that some argue that certain areas of the world have more natural resources or more suitable land for growing crops. If we go back to the first example in the book, obviously this theory doesn't work since both Nogales are in the same geographic location. The second theory, the cultural hypothesis, concerns how different demographic or cultural groups might lack work ethic or suffer from… middle of paper… the United States no longer took in British prisoners. So, with Africa out of the question “because it was unacceptable to send even the condemned to the “white man's graveyard”” (Acemoglu & Robinson 274), they sent them to Australia. The Cables, a married couple of convicts, aboard the Alexander, decided to report the captain of a ship for theft. The couple could not do much under English laws, but these laws did not apply in Australia and the Cables won the case. Unknown at the time, this would lead Australia and Britain down two different paths in history. Faced with several conflicts, Australia did not need a glorious revolution and did not have to overthrow any absolutist ruler to embark on the path to inclusive institutions. Australia took advantage of several opportunities, such as the industrial revolution, to strive to become a prosperous nation.