Authors of ‘Why Nations Fail’ win Nobel for economics

Authors of Why Nations Fail, Daron Acemoglu and James Robinson, along with the former IMF chief economist, Simon Johnson, were awarded the Nobel Prize in economics yesterday for their research on why some countries are rich and others are poor.

The book compares places like the US and Mexico to show how different institutions lead to different outcomes. They focused on how European colonization led to two types of institutions: inclusive and extractive.

Inclusive institutions, such as fair laws, good governments, and strong education systems, help countries grow by giving people opportunities to succeed.

Extractive institutions, which allowed a small group to exploit resources and people, caused long-term poverty.

They also found that regions where Europeans settled in larger numbers tended to develop better institutions, resulting in greater prosperity. Their main message is that good institutions—like democracies—help nations grow and succeed, while unfair or corrupt systems hold them back.

However, their work has been criticized for not including how culture leads to prosperity and economically successful autocratic countries like China.