The 2024 Nobel Prize in Economic Sciences was officially announced on the evening of October 14. University of Chicago professor James A. Robinson shared this honor with long-term collaborators MIT scholars Daron Acemoğlu and Simon Johnson. The Nobel Prize Committee said that the three scholars have shown the importance of social institutions to a country's prosperity. A society with poor rule of law and a system that exploits the population will not lead to growth or change for the better. Their research helps to understand this. reason.
Jakob Svensson, Chairman of the Nobel Prize Committee: “Reducing income differences between countries is one of the greatest challenges of our time.”
Why are there differences in national prosperity? Social system is the key
The issue of the gap between the rich and the poor in the country has been noticed in the 20th century, but at that time it was generally believed that the aspects of natural resources and economic systems were more important. Robinson and his colleagues' landmark interdisciplinary research, spanning history and economics, illustrates how political institutions and institutions are key to economic development in low-income countries in Latin America, Africa, Asia, and elsewhere.
The Nobel Prize committee specifically cited two papers written by this three-person team while Robinson was at Berkeley: one, exploring how European colonial policies shaped their colonies; and the other, exploring the world's richest society in 1500. —The Mughal Empire in India and the Aztec and Inca Empires in the Americas suffered extreme reversals after colonization.
When Europeans colonized much of the world, social systems changed. In some places, the goal was to exploit indigenous peoples and extract resources for the benefit of the colonists; in other places, the colonists established inclusive political and economic systems for the long-term benefit of European settlers.
Research by scholars such as Robinson shows that one explanation for differences in national prosperity is social institutions introduced during the colonial period. When inclusive institutions were often introduced into poor countries when they were colonized, populations generally prospered (economics continued to grow). On the contrary, pre-colonial rich countries that introduced predatory systems fell into poverty (predatory systems were not necessarily introduced, but in any case were maintained by vested groups for their own benefit).
Research suggests that introducing inclusive systems will create long-term benefits for everyone (more people). But predatory systems only bring short-term benefits to people (specific advantaged groups) through power. As long as a political system continues to maintain control, people will not believe that they will carry out economic reforms. Research suggests this is why improvements aren't happening.
What conditions are needed for a country to achieve economic growth and prosperity?
According to Robinson's work (Why Nations Fail: The Roots of Power, Wealth, and Poverty), new (external) forces supporting inclusive institutions should be stronger than existing elites, because existing elites have the power to maintain predatory institutions. for their own benefit.
In addition, the state must have "embedded autonomy," that is, a bureaucracy that is closely tied to private enterprise but maintains independence and prestige. This year's Nobel Prize in Economics emphasized that democracy and inclusive systems are the elements that promote sustained economic prosperity and development. In an interview after winning the award, Robinson also mentioned that Taiwan has met the social model that is conducive to prosperity and development. In this regard, the question I want to ask is, what is the ultimate meaning of national prosperity and development? What are we pursuing when we pursue economic growth measured in GDP?
References:
Why Nations Fail: The Origins of Power, Prosperity, and Poverty
Predatory, developmental, and other apparatuses: A comparative political economy perspective on the Third World state
The Nobel Prize (2024)
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