Includes bibliographical references and index.

Preface: Why Egyptians filled Tahrir Square to bring down Hosni Mubarak and what it means for our understanding of the causes of prosperity and poverty -- So close and yet so different : Nogales, Arizona, and Nogales, Sonora, have the same people, culture, and geography. Why is one rich and one poor? -- Theories that don't work : poor countries are poor not because of their geographies or cultures, or because their leaders do not know which policies will enrich their citizens -- The making of prosperity and poverty : how prosperity and poverty are determined by the incentives created by institutions, and how politics determines what institutions a nation has -- Small differences and critical junctures: the weight of history : how institutions change through political conflict and how the past shapes the present -- "I've seen the future, and it works" : growth under extractive institutions : what Stalin, King Shyaam, the Neolithic Revolution, and the Maya city-states all had in common and how this explains why China's current economic growth cannot last -- Drifting apart : how institutions evolve over time, often slowly drifting apart -- The turning point : how a political revolution in 1688 changed institutions in England and led to the Industrial Revolution -- Not on our turf : barriers to development : why the politically powerful in many nations opposed the Industrial Revolution -- Reversing development : how European colonialism impoverished large parts of the world -- The diffusion of prosperity : how some parts of the world took different paths to prosperity from that of Britain -- The virtuous circle : how institutions that encourage prosperity create positive feedback loops that prevent the efforts by elites to undermine them -- The vicious circle : how institutions that create poverty generate negative feedback loops and endure -- Why nations fail today : institutions, institutions, institutions -- Breaking the mold : how a few countries changed their economic trajectory by changing their institutions -- Understanding prosperity and poverty : how the world could have been different and how understanding this can explain why most attempts to combat poverty have failed.