The 2024 Nobel Prize in Economics has been awarded to Daron Acemoglu, Simon Johnson and James Robinson for explaining the essence of global economic inequalities. Their work provides guidelines for developing countries to follow paths of sustainable growth.
The 2024 award emphasised the influence of economic and political institutions on each nation’s prosperity. The laureates’ research showed that the presence of inclusive institutions – those that promote participation and protect economic and social rights – is a crucial factor for development. They identified that, historically, many nations that were colonised (such as Mozambique and almost all African countries, for example) inherited extractive institutional structures, which limited growth and prosperity, while countries with more inclusive institutions achieved greater economic development in the long term.
On the other hand, the joint work by Acemoglu, Johnson and Robinson explores how political institutions that allow for greater participation and inclusion help to unleash people’s economic potential, while those that restrict rights and centralise power promote inequality and stagnation. This work has come to be seen as fundamental to understanding why some nations prosper while others remain in a cycle of poverty.
Demography was decisive
Studies by Daron Acemoglu, Simon Johnson and James Robinson revealed that the larger the original population of colonised regions, the worse the institutions imposed by the colonisers.
The joint work by Acemoglu, Johnson and Robinson explores how political institutions, which allow for greater inclusion, help to unlock the economic potential of populations
The countries with the largest indigenous populations were usually also those that offered the greatest resistance to colonisation. However, once defeated, the native peoples were forced to work for the colonisers. This dynamic meant that few European migrants were interested in building a community. Thus, the institutions created in these regions ‘focused on benefiting a local elite at the expense of the general population. There were no elections and political rights were extremely limited,’ explained the Royal Swedish Academy of Sciences, the institution responsible for the Nobel Prize. On the other hand, colonies with a smaller original population, while offering less resistance to colonisation, could not meet all the demand for labour. This led the colonising countries to create ‘inclusive economic institutions that encouraged settlers to work hard and invest in their new homeland’, with a view to settlement rather than exploitation.
The evidence that legitimises the prize
One example analysed by the researchers is that of Nogales, a city divided in half, with one part in the United States of America and the other in Mexico. The North American part, colonised by the British in order to attract migrants, is more prosperous.
The Mexican region, colonised by Spain in an extractivist logic, and which today lives with organised crime, is more full of uncertainties and has less wealth.
This is not the first study to attempt to explain the essence of inequalities between nations, nor is it the first approach to place the colonisation of peoples at the heart of these inequalities.
Text: Celso Chambisso – Photo: D.R
