The Royal Swedish Academy of Sciences has awarded the Alfred Nobel Memorial Prize in Economics to Daron Acemoglu, Simon Johnson and James Robinson for their research on how institutions are formed and affect the level of welfare in countries.
This was reported by the Nobel Committee.
The laureates showed that one of the explanations for differences in the well-being of countries is social institutions introduced during colonization. It is they who influence changes in the levels of wealth in countries.
The Nobel Committee points out that some countries are trapped in a situation with extractive institutions and low economic growth. And the creation of inclusive institutions there will create "long-term benefits for all," while extractive institutions provide short-term benefits for the people in power.
Such a system guarantees that they will remain under control, no one will trust the promises of politicians about future economic reforms. According to the laureates, this is why there is no improvement. Ultimately, the only option may be a transfer of power and the establishment of democracy.
"Reducing the huge income gap between countries is one of the biggest challenges of our time. The laureates have demonstrated the importance of public institutions to achieve this goal," said Jakob Svensson, chairman of the Economic Sciences Prize Committee.
- The Nobel Prize is one of the most prestigious international prizes awarded annually for outstanding scientific research, revolutionary inventions, or a significant contribution to culture or social development. The size of the Nobel Prize is about $1.1 million.
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