Two professors from the Massachusetts Institute of Technology (MIT), Daron Acemoglu and Simon Johnson, alongside the University of Chicago’s James A. Robinson, have been awarded the Nobel Prize in Economic Sciences. Their extensive research aids in providing an explanation for the stark difference in the levels of economy throughout the world.
A Quest to Explain Global Inequality
As a part of their research, the Royal Swedish Academy of Sciences had awarded Acemoglu and Robinson for attempting to analyze the reasons behind the economic boost and decline within a particular nation. This specific research focuses on the major impact societal systems and institutions, especially those set during colonization, have on the overall growth and economy of a nation.
The Initial Reaction: Delight and Amazement
For Acemoglu, the announcement was delightful as well as shocking at the same time. “Delighted, it’s just a real shock and amazing,” These words explain the nature of the award and its significance, marking a pivotal moment in Achmed’s life.
A Trio of Economic Pioneers: The 2024 Laureates
The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, or Nobel Prize in Economics, was awarded to Professors Acemoglu, Johnson, and Robinson. All three have devoted their professional lives to analyzing the multiple-dimension problems related to the factors of growth of the economy, development, and the persistent inequalities among countries.
The Colonial Legacy: A Defining Influence
A major finding of research on the laureates’ work is the impact of colonialism. Their work shows that the nature of the political and economic institutions that were put in place during colonization very much determined the growth of the economies of most of the countries.
Extractive vs. Inclusive Institutions: A Tale of Two Paths
The research conducted by the professors shows a significant difference in the economic performance of countries with “extractive institutions” as opposed to those with “inclusive institutions.”
- Extractive institutions: These were formulated to enable the capture of power and riches by a minority ruling elite for the use of colonizers and their supporters. This type of governance, according to the research, greatly stilted economic prosperity while entrenching structural inequalities.
- Inclusive institutions: On the contrary, frameworks that helped sustain long-term economic health and development were those that facilitated the division of power, safeguarded property rights, and offered participation in the economy to a wide range of people.
Understanding the Roots of Inequality: A Call for Change
Jakob Svensson, who is also on the Committee for the Prize in Economic Sciences, drew attention to how the work of the awardees focuses on one of the major problems the world faces. “Bridging the enormous gaps in income across nations is one of the great challenges of our time,” Svensson remarks. “The awardees certainly proved the relevance of societal institutions in doing so.”
The Challenge of Reform: Surmounting the Inertia of Institutions
This group of economists not only addresses the origin of disparity in wealth but also raises important concerns about the ease of reforming extractive systems. Their work, however, also points out particular conditions under which change can happen, which is useful for people trying to encourage development.
The Sveriges Riksbank Prize: A Tribute to Alfred Nobel
Every prize has a backstory and in this case, there’s a curious reason as to why the Sveriges Riksbank Prize in Economic Sciences is popularly known as ‘the Nobel Prize in Economics.’ Established in 1968 by Sveriges Riksbank, the state bank of Sweden, this prize was awarded in honor of Alfred Nobel, who was the Swedish inventor of dynamite.
The Prize Package: Recognition and Reward
The noted winners of the prize receive a gold medal, a diploma, and a monetary reward, which is approximately $1 million USD this fiscal year. Along with a share of the monetary award, which amounts to 11 million Swedish kronor
A Legacy of Insight and a Path to Progress
The prize, along with a gold medal and diploma, was awarded to Daron Acemoglu, Simond Johnson, and James A. Robinson in honor of their insights into global economic inequality, unlocking new doors of understanding.
