Why are some countries richer than others? The 2024 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel has been awarded to three researchers who have helped shed light on this fundamental question.
The income gap between the richest and the poorest nations has been widely documented. However, Daron Acemoglu and Simon Johnson, both from the Massachusetts Institute of Technology in Cambridge, and James A. Robinson from the University of Chicago in Illinois, have studied the evidence for why these inequalities persist.
The three economists, who will share the 11 million Swedish Kronor (US $1 million) prize for their findings, researched the impact of European colonization on various countries’ economies.
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“They looked specifically at the history of European colonialism and the contrast in the fortunes of countries such as the United States or Australia versus countries in Sub-Saharan Africa or South Asia,” says Diane Coyle, an economist at the University of Cambridge, UK. “Their work has had a profound impact on how people think about economic development.”
In countries that were already rich, or were places where European settlers did not survive well because of illnesses or the climate, “colonial institutions were extractive”, Coyle says. “In contrast, in countries that were poorer to start with or had better climates, Europeans instead built more inclusive institutions similar to their own countries.”
“The laureates demonstrated that the places that were, relatively speaking, the richest at their time of colonization are now among the poorest,” the Royal Swedish Academy of Sciences said in a statement.
“When Europeans colonised large parts of the world, the existing institutions sometimes changed dramatically, but not in the same way everywhere. In some colonies, the purpose was to exploit the indigenous population and extract natural resources to benefit the colonizers. In other cases, the colonisers built inclusive political and economic systems.”
The roots of inequality
Kate Pickett, who studies inequality at the University of York, UK, says it is important that the Nobel committee has recognized “researchers who are focused on the root causes of inequalities, showing that economic growth isn’t always important for countries, if it is exploitative and extractive”.
Speaking by telephone at the Nobel prize announcement Acemoglu said he was “surprised and shocked” to have got the call. “You dream of having a good career, but this is over and on top of that. So, it’s a great surprise, I’m honoured.”
Women are under-represented in economics globally
Acemoglu is only the second person born in Turkey to win a science, medicine or economics Nobel, after Aziz Sancar, who shared the
chemistry prize in 2015
with Tomas Lindahl and Paul L. Modrich for studies of DNA repair.
All of this year’s Nobels except the peace prize have gone to men. “Let’s hope it is a one-year blip,” Coyle says. “In recent years, there have been more women winners [in economics]. If this were to be the start of a reversal, that would be concerning.”
“It looks as if long-standing inequalities in women’s opportunities are still being reflected in the distribution of the Nobel prizes,” says Pickett. “Let’s hope in the future we see that change and we see an equal number of women honoured.”