The Royal Swedish Academy of Sciences has decided to award the 2024 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobelto Daron Acemoglu, Simon Johnson and James A. Robinson \u201cfor studies of how institutions are formed and affect prosperity.\u201d<\/p>\n
This year\u2019s economic sciences laureates \u2013 Daron Acemoglu, Simon Johnson and James Robinson \u2013 have demonstrated the importance of societal institutions for a country\u2019s prosperity. Societies with a poor rule of law and institutions that exploit the population do not generate growth or change for the better. The laureates\u2019 research helps us understand why.<\/p>\n
When Europeans colonised large parts of the globe, the institutions in those societies changed. This was sometimes dramatic, but did not occur in the same way everywhere. In some places the aim was to exploit the indigenous population and extract resources for the colonisers\u2019 benefit. In others, the colonisers formed inclusive political and economic systems for the long-term benefit of European migrants.<\/p>\n
The laureates have shown that one explanation for differences in countries\u2019 prosperity is the societal institutions that were introduced during colonisation. Inclusive institutions were often introduced in countries that were poor when they were colonised, over time resulting in a generally prosperous population. This is an important reason for why former colonies that were once rich are now poor, and vice versa.<\/p>\n
Some countries become trapped in a situation with extractive institutions and low economic growth. The introduction of inclusive institutions would create long-term benefits for everyone, but extractive institutions provide short-term gains for the people in power. As long as the political system guarantees they will remain in control, no one will trust their promises of future economic reforms. According to the laureates, this is why no improvement occurs.<\/p>\n
However, this inability to make credible promises of positive change can also explain why democratisation sometimes occurs. When there is a threat of revolution, the people in power face a dilemma. They would prefer to remain in power and try to placate the masses by promising economic reforms, but the population are unlikely to believe that they will not return to the old system as soon as the situation settles down. In the end, the only option may be to transfer power and establish democracy.<\/p>\n
\u201cReducing the vast differences in income between countries is one of our time\u2019s greatest challenges. The laureates have demonstrated the importance of societal institutions for achieving this,\u201d says Jakob Svensson, chair of the committee for the prize in economic sciences.<\/p>\n","protected":false},"excerpt":{"rendered":"
The Royal Swedish Academy of Sciences has decided to award the 2024 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobelto Daron Acemoglu, Simon Johnson and James A. Robinson \u201cfor studies of how institutions are formed and affect prosperity.\u201d This year\u2019s economic sciences laureates \u2013 Daron Acemoglu, Simon Johnson and James Robinson \u2013 […]<\/p>\n","protected":false},"author":48,"featured_media":170563,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_bbp_topic_count":0,"_bbp_reply_count":0,"_bbp_total_topic_count":0,"_bbp_total_reply_count":0,"_bbp_voice_count":0,"_bbp_anonymous_reply_count":0,"_bbp_topic_count_hidden":0,"_bbp_reply_count_hidden":0,"_bbp_forum_subforum_count":0,"footnotes":""},"categories":[1],"tags":[5880],"class_list":["post-170562","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-nobel"],"yoast_head":"\n