Comparison Between Mexico and The U.S. In Why Nations Fail

United States

United States (Photo credit: Moyan_Brenn)

I wanted to share some statistics from the book Why Nations Fail by Daron Acemoglu and James A. Robinson. These statistics concern innovation and the Industrial Revolution and as the authors make their case about institutions I found these very interesting including this first statement from page 32.

“As the United States began to experience the Industrial Revolution in the first half of the nineteenth century, Mexico got poorer.”

Concerning banks from page 33:

“While in 1818 there were 338 banks in operation in the United States, with total assets of $160 million, by 1914 there were 27, 864 banks, with total assets of $27.3 billion.”

From page 34:

“The same was not true in Mexico. In fact, in 1910, the year in which the Mexican Revolution started , there were only forty-two banks in Mexico, and two of these controlled 60 percent of total banking assets. Unlike in the United States, where competition was fierce, there was practically no competition among Mexican banks. This lack of competition meant that banks were able to charge their customers very high interest rates, and typically confined lending to the privileged and the already wealthy, who would then use their access to credit to increase their grip over the various sectors of the economy.”

 

 

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