The Nobel Prize in Economics this year was awarded to Daron Acemoglu, Simon Johnson from the Massachusetts Institute of Technology, and James Robinson from the University of Chicago.
The Nobel Committee noted that they demonstrated the importance of social institutions for a country's prosperity. Societies with low levels of law and order and institutions that exploit the population do not contribute to growth and positive change.
The research showed that some countries are trapped in a situation with extractive institutions and low economic growth. Implementing inclusive institutions will bring long-term benefits to all. However, extractive institutions provide short-term benefits for those in power. As long as the political system ensures they remain in power, no one will trust their promises of future economic reforms. According to the laureates, this is why no improvements occur.
«Reducing the huge income gap between countries is one of the greatest challenges of our time. The laureates demonstrated the importance of social institutions in achieving this goal», — said Jakob Svensson, chairman of the prize committee in economic sciences.