As you know by now, Jeff Sachs reviewed Why Nations Fail, and Acemoglu and Robinson provided a response on the webpage for the book. Sachs doesn't like the exclusive focus on political institutions, and instead prefers multiple factor explanations. But as Acemoglu and Robinson argue a framework that doesn't exclude factors in the explanation is not much of a framework. Sachs now responds that a linear model of economic history misses out on critical contingencies in history, he prefers what he calls multi-dimensional dynamic model of economic history and development. Sachs doesn't deny the role of political institutions, but he argues that technological, cultural and geographic factors also matter.
A lof of work over the past 20 years by scholars influenced by the Austrian school of economics, as well as Public Choice economics, have focused their research attention on this area of economic inquiry. Peter Leeson's varioius examination of development economics and comparative institutional analysis; Chris Coyne's work on failed and weak states and the political economy of post-war reconstruction; Virgil Storr's work on culture and development; Ben Powell's work on the economics of sweatshops; and Claudia Williamson's work on the role of informal institutions in the "institutions rule" debate all come immediately to mind. Given the issues Sachs rasies, obviously this professional debate isn't going to end anytime soon. It is my expectation that the work of Austrian/public choice thinkers on development will continue to grow and flourish and penetrate the thinking within the profession that informs the cutting edge of this scientific inquiry into the nature and causes of the wealth and poverty of nations.