Three economists from 2 US institutions share Nobel Prize in Economics

The 2024 Nobel Prize for Economics has been awarded to three US economists - Daron Acemoglu and Simon Johnson, both from the Massachusetts Institute of Technology, Cambridge and James A Robinson, from the University of Chicago, Illinois.

The Royal Swedish Academy of Sciences said the three have been awarded the prize for their studies on income disparities among nations and how institutions in the countries played an important role in the prosperity of nations.

These economists – Daron Acemoglu, Simon Johnson and James Robinson – have demonstrated the importance of social institutions in the prosperity of a country, the Academy pointed out.

In societies where the rule of law is poor, the institutions also turn out to be exploiting the population, which in turn would have a debilitating effect on the prosperity of these nations.

While it is common knowledge that exploitative societies breed exploitative institutions, the economists see these institutions as a heritage of their colonial past.

When Europeans colonised most parts of the world, especially in Asia and Africa, their aim was to exploit the wealth of the occupied nations and accordingly, they built institutions to back up their plundering of the wealth of the colonised people.

However, there could be variations on the extent to which the colonisers have succeeded in perpetuating exploitation as the style and level of exploitation varied from country to country, according to the economists.’

While the societies in these former colonies have undergone changes, the extent of change in these institutions have not been in tune with the changes in societies. 

According to the economists, there are inclusive institutions that creates long-term benefits for all. But, there are also extractive institutions that provide short-term gains to the people in power. 

This, according to the economists, can explain the differences in the economic status of these countries.

This is an important reason for why former colonies that were once rich are now poor, and vice versa.

Some countries that were very rich before they were colonised by western powers and exploited to the hilt, remain trapped in a situation with extractive institutions and low economic growth, while some have managed to break off the colonial past, they point out.