1 month ago
14 ARTICLE AD
The Royal Swedish Academy of Sciences has announced that Daron Acemoglu and Simon Johnson, professors at the Massachusetts Institute of Technology, along with James A. Robinson from the University of Chicago, have been awarded the 2024 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.
The trio was recognised “for studies of how institutions are formed and affect prosperity,” according to the press release published on the Nobel Prize website on Monday.
PUNCH Online reports that this concludes the announcements of the winners for the 2024 Nobel Prizes.
According to the release, the groundbreaking research by Acemoglu, Johnson, and Robinson highlights the critical role that societal institutions play in determining a country’s economic success.
Their findings reveal that nations with inclusive, stable institutions tend to experience long-term prosperity, while those with extractive, oppressive systems often remain trapped in cycles of poverty and underdevelopment.
“These laureates have helped us understand the deep-rooted reasons behind the vast differences in prosperity between nations. Their work demonstrates that poor rule of law and exploitative institutions stifle growth and inhibit positive societal change,” the Nobel committee stated.
One of the core aspects of their research focuses on how European colonisation dramatically altered institutional structures in various regions worldwide.
In places where colonisers introduced inclusive political and economic systems, long-term growth followed, benefiting local populations.
However, in regions where colonisers established exploitative institutions focused on extracting resources, poverty and inequality often persisted.
Their work has become a central explanation for why some former colonies that were once rich are now poor, and vice versa.
“The introduction of inclusive institutions would create long-term benefits for everyone, but extractive institutions provide short-term gains for the people in power,” the committee added.
Spanning six prize categories—Physics, Chemistry, Physiology or Medicine, Literature, Peace, and Economic Sciences—the Nobel Prizes are announced every October and presented in a grand ceremony on 10 December.
Understanding Global Economic Inequality
The laureates’ research offers crucial insights into why many nations struggle with economic stagnation.
Political elites, benefiting from extractive institutions, resist reforms that could lead to broader, more inclusive growth. At the same time, these elites often face dilemmas when confronted with the threat of revolution or societal upheaval.
According to the trio, democratisation can sometimes emerge when the ruling class realises it cannot maintain power without making genuine concessions.
“When there is a threat of revolution, the people in power face a dilemma. They would prefer to remain in power by promising economic reforms, but the population is unlikely to believe them,” the Nobel committee explained in its statement.
“In the end, the only option may be to transfer power and establish democracy.”
As global inequality remains one of the world’s greatest challenges, the laureates’ findings have profound implications for policymakers and economists seeking to foster growth and reduce poverty.
Jakob Svensson, Chair of the Prize Committee, emphasised this point, stating, “Reducing the vast differences in income between countries is one of our time’s greatest challenges. The laureates have demonstrated the importance of societal institutions for achieving this.”
Meet the Laureates
Daron Acemoglu, born in 1967 in Istanbul, Türkiye, holds a PhD from the London School of Economics, awarded in 1992. Acemoglu is currently a professor at the Massachusetts Institute of Technology.
Simon Johnson, born in 1963 in Sheffield, UK, earned his PhD from MIT in 1989. Johnson is also a professor at MIT, where he has conducted extensive research on economic development and institutions.
James A. Robinson, born in 1960, completed his PhD at Yale University in 1993. He is now a professor at the University of Chicago and has co-authored several influential works on institutions and economic development.
The three scholars will share the prize amount of 11 million Swedish kronor (approximately $1 million USD), as revealed on the Nobel Prize website.
This prestigious award was announced by the Royal Swedish Academy of Sciences, an independent organisation founded in 1739 that aims to promote the sciences and encourage interdisciplinary collaboration.
PUNCH Online earlier reported that the 2024 Nobel announcements began with the Nobel Prize in Physiology or Medicine on 7 October, awarded to Victor Ambros and Gary Ruvkun for their groundbreaking discovery of microRNA and its role in gene regulation.
Last Tuesday, the Nobel Prize in Physics was awarded to John Hopfield and Geoffrey Hinton, recognising their foundational contributions to machine learning through artificial neural networks.
