Daron Acemoglu, Simon Johnson and James Robinson have won this year’s Economics Nobel Prize.
These names join an eminent list of economic thinkers such as Simon Kuznets, Milton Friedman and Herbert Simon.
Their field of research studies the influence of institutions in different countries and how this can lead to vast inequalities. They found that institutions set up by colonial powers can have a lasting and stubborn impact on modern national politics, decades after a country’s independence.
One difference they found was that if a country had a high indigenous population, then institutions and rules were established by colonisers that focused on extraction of resources and labour. These systems were hostile or indifferent to the indigenous population and fertile for corruption.
If a country was sparsely populated by indigenous people, then more people from the colonial country moved there. To appease immigrants from their own country the colonial powers legislated property rights and encouraged longer-term economic planning.
They also studied why it is harder for countries to remove these acquisitive institutional structures post-colonialism. If a population reaches a sustained level of revolt and riots, then the ruling elite have historically made one of three plays.
Authoritarian or corrupt leaders can ignore the revolution, resist the revolution or abdicate leadership. The first two options result in further unrest or resentment and the latter provides incoming leadership with volatile political circumstances and weak institutions.
The prompt for Acemoglu to study this field was the shock he felt when discovering disparity of wealth between countries of 30 to 50 factors whilst studying at university.
Johnson published a book last year about technology and government interactions with co-winner Acemoglu. The book is available in the university library.
Robinson in his interview with Nobel Prize website discussed the importance of citizen lead change in national institutions looking to evolve to democracy.
Acemoglu and Robinson have provided wholesome reaction selfies at the bottom of their interview pages which are linked above.
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