An interesting article co-authored by Nassim Nicholas Taleb proposes 5 reasons why countries fail
1. A centralized governing system
Ming Dynasty & Pharaonic Egypt, and more recently, Soviet Union, Egypt, Syria & Iraq collapsed because they were too centralized. While centralization seems more efficient & stable, it increases systemic risks like disastrous national-level reforms, inability to handle political & ethnoreligious diversity, among other things.
In contrast, we see success in decentralized Switzerland and centralized but smaller & easier to govern city-states like Venice, Dubai, & Singapore.
2. An undiversified economy
Countries dependent on a single large source of revenue like tourism (Greece, Egypt, Hawaii), Diamonds (Botswana), auto (Japan) are more prone to collapse.
3. Excessive debt & leverage
4. A lack of political variability
Constant political turmoil, mild instabilities, etc. (which characterize democracies) make countries more resilient. Autocracies & dictatorships are doomed to collapse.
5. No history of surviving past shocks
Countries learn their lessons from having survived big shocks – economic or political – in their recent past. No such history of survival is a risk.
Based on these markers, the authors suggest Saudi Arabia, Egypt & Venezuela are fragile; India, Japan, Nigeria, Brazil are less fragile; and China perhaps is growing more fragile.
Interesting ideas to ponder