14 October 2024

The Nobel Prize In Economics

The Nobel prize goes to Daron Acemoglu, Simon Johnson and James Robinson for their work on institutions, prosperity, and economic growth. Here is a key piece summarizing their work: Institutions as a Fundamental Cause of Long-Run Growth.
This paper develops the empirical and theoretical case that differences in economic institutions are the fundamental cause of differences in economic development. We first document the empirical importance of institutions by focusing on two “quasi-natural experiments” in history, the division of Korea into two parts with very different economic institutions and the colonization of much of the world by European powers starting in the fifteenth century. 
We then develop the basic outline of a framework for thinking about why economic institutions differ across countries. Economic institutions determine the incentives of and the constraints on economic actors, and shape economic outcomes. As such, they are social decisions, chosen for their consequences. Because different groups and individuals typically benefit from different economic institutions, there is generally a conflict over these social choices, ultimately resolved in favor of groups with greater political power. The distribution of political power in society is in turn determined by political institutions and the distribution of resources. Political institutions allocate de jure political power, while groups with greater economic might typically possess greater de facto political power… 
Economic institutions encouraging economic growth emerge when political institutions allocate power to groups with interests in broad-based property rights enforcement, when they create effective constraints on power-holders, and when there are relatively few rents to be captured by power-holders.

From Marginal Revolution.

There is a strong school of thought in the economic development literature that argues that institutions and rules are not enough and that culture matters too.

6 comments:

neo said...

There is a strong school of thought in the economic development literature that argues that institutions and rules are not enough and that culture matters too.-max weber

andrew said...

One of the first to say so, but certainly not the last.

neo said...

Francis Fukuyama

andrew said...

Indeed, although he also argued, in hindsight prematurely, for an "end of history" scenario in which everyone in the world eventually converged on a Western style democracy with mixed capitalism model, regardless of culture.

andrew said...

A 2021 paper by some of them addressing culture. https://www.nber.org/papers/w28832 see also https://www.ggd.world/p/congratulations-to-acemoglu-johnson?r=zccyx&utm_medium=ios&triedRedirect=true

neo said...

if you have a successful culture should not you be conservate