Earlier this month, Daron Acemoglu, Simon Johnson, and James Robinson were awarded the Nobel prize in economics for their work on how colonial institutions are a key determinant of whether countries become rich or poor.
The basis of their work is a paper published in 2001 which led to a book by Acemoglu and Robinson, “Why Nations Fail: The Origins of Power, Prosperity and Poverty,” which came out in 2012. The essence of their argument is that the wealth and poverty of countries depends on the kind of institutions they have. Inclusive institutions, which protect property rights and democracy, are more likely to achieve sustainable economic growth. Countries which rely on “extractive institutions” to concentrate wealth in the hands of a ruling elite are more likely to remain stuck in poverty.
