Stockholm, October 14 (IANS). The Royal Swedish Academy of Sciences on Monday awarded the Nobel Prize to three American economists.
They provided new insight into why there are such large differences in prosperity between countries and attempted to help solve the puzzle of why some countries are rich and others poor.
Daron Acemoglu and Simon Johnson of the Massachusetts Institute of Technology (MIT) and James A. of the University of Chicago, USA. Robinson was honored with this prestigious award.
Acemoglu, Johnson, and Robinson have demonstrated the importance of social institutions for a country’s prosperity.
The academy said, “In societies where the rule of law is poor and institutions exploit the population, development and change for the better do not occur. The laureates’ research helps us understand why. “
Jakob Svensson, chair of the awards committee, said, “Reducing the huge income gap between countries is one of the greatest challenges of our time. The winners highlight the importance of social institutions to achieve this goal.”
Nobel laureates have shown that one reason for differences in the prosperity of countries is the social institutions introduced during colonization. In some colonies the purpose was to exploit the indigenous population and exploit natural resources to benefit the colonists.
In other cases colonists created inclusive political and economic systems for the long-term benefit of European settlers.
According to a statement from the academy, “This is an important reason why former colonies that were once rich have become poor and those that were poor have become rich.”
The researchers also said that as long as the political system continues to guarantee that the elite remain in control, no one will believe their promises of future economic reforms.
According to the award winners this is why there is no improvement.
However, the inability to make credible promises of positive change may also explain why democratization sometimes occurs.
The Academy explained, “When there is a threat of revolution, those in power face a dilemma. They would like to remain in power and try to appease the public by promising economic reforms, but people are It cannot be believed that they will not return to the old system as soon as the situation returns to normal.”
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