Three US-based professors, including two UK-born academics, have been awarded this year’s Nobel prize in economics, for showing how the political and economic systems introduced by colonisers can determine whether a country is rich or poor today.
The explanation put forward by Turkish-American Daron Acemoğlu, Sheffield-born Simon Johnson and Briton James A Robinson, suggests that inclusive institutions set up for the long-term benefit of European migrants ended up resulting in more prosperous societies in the long term.
However, they found that in countries where the aim was to exploit the Indigenous population and extract resources for the colonisers’ benefit, the impact has been detrimental, and resulted in far poorer societies, leaving some countries trapped in low economic growth cycles.
“The laureates demonstrated that this led to a reversal of fortune. The places that were, relatively speaking, the richest at their time of colonisation are now among the poorest,” the Nobel prize announcement said.
“This is an important reason for why former colonies that were once rich are now poor, and vice versa,” it added.
However, the academics said the effect can be reversed if a country can “break free of its inherited institutions to establish democracy and the rule of law. In the long run, these changes also lead to reduced poverty.”
The trio of academics will share the award, which comes with an 11m kroner (£810,000) cash prize and a gold medal. Established in the 1960s, several decades after the original Nobel prizes, it is technically known as the Sveriges Riksbank prize in economic sciences in memory of Alfred Nobel.
“Reducing the vast differences in income between countries is one of our time’s greatest challenges,” Jakob Svensson, chair of the committee for the prize in economic sciences, said. “The laureates have demonstrated the importance of societal institutions for achieving this.”
Acemoğlu, 57, and Johnson, 61, are both professors at the Massachusetts Institute of Technology, in Cambridge, in the US. Together, they co-authored a book last year, called Power and Progress: Our Thousand-Year Struggle Over Technology and Prosperity.
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Johnson is also known for a brief stint at the International Monetary Fund from March 2007 to August 2008.
Robinson, 64, a professor at the University of Chicago, wrote a book with Acemoğlu – Why Nations Fail: The Origins of Power, Prosperity and Poverty – which was first published in 2012.
Source: www.theguardian.com