Understanding Prosperity: NOBEL Prize awarded for groundbreaking research on institutions and economic development

The Royal Swedish Academy of Sciences has awarded the Memory of Alfred Nobel to three US-based economistsDaron Acemoglu, Simon Johnson, and James A. Robinson"for their studies on how institutions are formed and affect prosperity."

- Tirthankar Mitra

The Nobel citation highlights that the trio "has helped us understand the differences in prosperity among nations."

This year's Nobel laureates have shown how the structure of a country's institutions can be the key to prosperity. For decades, economists have tried to answer a fundamental question: why are some countries rich while others remain poor?

The answer, as their research suggests, lies in the nature of political and economic institutions. Countries that foster inclusive institutions those that enforce the rule of law, protect property rights, and provide opportunities for all tend to prosper, while nations with exploitative institutions struggle to achieve sustainable growth.