Economics Nobel Winners 2024 and their studies on ‘how institutions are formed and affect prosperity’ Premium

Nobel laureates Acemoglu, Johnson, and Robinson's research on institutions, prosperity, and economic development explained in detail.

The Royal Swedish Academy of Sciences on Monday (October 14, 2024) awarded the Nobel Prize in Economics to Daron Acemoglu, Simon Johnson and James A. Robinson for “studies of how institutions are formed and affect prosperity”. The trio demonstrated how societies with a poor rule of law and institutions that capitalise on its population with an exploitative intent neither generate growth nor change for the better. In fact, a similar theme was explored by Mr. Acemoglu and Mr. Robinson in an earlier book Why Nations Fail: The Origins of Power, Prosperity and Poverty (2012).

Explore this year’s Nobel winners, and their achievements with this interactive guide

Why Nations Fail was the second of the three books authored by Mr. Robinson and Mr. Acemoglu together. Each of them traced the prevailing political scenarios of a region to their economic histories. Their first, Economic Origins of Dictatorship and Democracy (2005) proposed “a theory of the emergence and stability of democracy and dictatorship”. The third book, titled The Narrow Corridor: States, Society and the Fate of Liberty, examines “the incessant and inevitable struggle between states and society. Its purpose was to throw light on the deep historical process that have helped shape the modern world.

One of the fundamental principles of the duo’s research has been demonstrating the exploitative role of “extractive economic institutions” — that do not create incentives needed for people to save, invest and innovate. “Extractive political instructions support these economic institutions by cementing the power of those who benefit from the extraction,” an excerpt from Why Nations Fail reads, elaborating, “Extractive economic and political institutions, though their details, vary under different circumstances, are always at the root of this failure.” 

The MIT professor holds a particular interest in issues relating to sub-Saharan Africa and Latin America. During his career, Mr. Robinson has conducted fieldwork and collected data in Bolivia, Colombia, Haiti, the Democratic Republic of Congo, Nigeria, Sierra Leone, South Africa and Zimbabwe. In fact, the Nobel laurate is a Fellow at the Institute of African Studies at the University of Nigeria at Nsukka. Furthermore, he taught a summer school at the University of the Andes in Bogota between 1994 and 2002.

To lend perspective into his reading: a 2008 paper titled ‘Governance and Political Economy Constraints to World Bank’s Country Assistance Strategy Priorities in Sierra Leone’ - having described the developing political scenario in the West African nation, held, “Though political institutions are not the whole story, they do heavily influence political incentives and the history of Sierra Leone makes clear that they have first order-effects”. He stated that whilst the financial institution correctly fostered decentralisation (back then), the reform process had to be “deepened” and “complemented by the reduction of executive autonomy, the strengthening of Parliament and the introduction of greater democracy into the institution of chieftaincy”.

Presently, Mr. Robinson is the Reverend Dr. Richard L. Pearson Professor of Global Conflict Studies and a University Professor at the Harris School of Public Policy and Department of Political Science at the University of Chicago. The scholar becomes the 101st recipient associated with the University to have won the Nobel.