This out of Sweden: the Royal Swedish Academy of Science has announced that it will be awarding the 2024 Nobel Prize in Economics to three U.S. econ professors whose research demonstrates that the rule of law and property rights foster an environment where democracy and prosperity flourish:
The laureates have shown that one explanation for differences in countries’ prosperity is the societal institutions that were introduced during colonisation. Inclusive institutions were often introduced in countries that were poor when they were colonised, over time resulting in a generally prosperous population. This is an important reason for why former colonies that were once rich are now poor, and vice versa.Some countries become trapped in a situation with extractive institutions and low economic growth. The introduction of inclusive institutions would create long-term benefits for everyone, but extractive institutions provide short-term gains for the people in power. As long as the political system guarantees they will remain in control, no one will trust their promises of future economic reforms. According to the laureates, this is why no improvement occurs.
More here, in a press release from the Massachusetts Institute of Technology where two of the professors teach:
Overall, the scholars have found, inclusive governments experience the greatest growth in the long run. By contrast, countries with extractive governments either fail to generate broad-based growth or see their growth wither away after short bursts of economic expansion.More specifically, because economic growth depends heavily on widespread technological innovation, such advances are only sustained when and where countries promote an array of individual rights, including property rights, giving more people the incentive to invent things. Elites may resist innovation, change, and growth to hold on to power, but without the rule of law and a stable set of rights, innovation and growth stall.
“Both political and economic inclusion matter, and they are synergistic,” Acemoglu said during the MIT press conference.
The scholarship of Acemoglu, Johnson, and Robinson has often been historically grounded, using the varying introduction of inclusive institutions, including the rule of law and property rights, to analyze their effects on growth.
Glad to see these principles being recognized (with 11 million kronor, even!).