On October 14, 2024, the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel was awarded to Daron Acemoglu, Simon Johnson, and James A. Robinson for their research on how institutions are formed and their impact on a nation’s prosperity. Their work demonstrates that societal institutions, especially those introduced during European colonization, play a crucial role in determining a country’s long-term economic success or stagnation.
They found that inclusive institutions, which benefit society as a whole, promote growth, while extractive institutions, which exploit the population for the benefit of those in power, hinder development. The laureates’ research also explains why reforms are often difficult to implement in countries with extractive institutions and why, in some cases, democratization occurs as a solution to this problem. Their work sheds light on the challenge of reducing global income disparities by emphasizing the critical role of institutions.
