Stockholm (AP) – Nobel Memorial Prize in Economics The Nobel Prize was awarded Monday to three economists who studied why some countries are rich and others poor, and who documented that freer and more open societies are more likely to flourish.
The Nobel Prize Committee of the Royal Swedish Academy of Sciences said in its announcement in Stockholm that the work of Daron Acemoglu, Simon Johnson and James Robinson “demonstrated the importance of societal institutions for the prosperity of any country.”
Acemoglu and Johnson work at the Massachusetts Institute of Technology, while Robinson conducts his research at the University of Chicago.
Jacob Svensson, chair of the Economic Sciences Prize Committee, said their analysis provided “a much deeper understanding of the root causes of why countries fail or succeed.”
Contacted by the academy in Athens, Greece, where he was scheduled to speak at a conference, Turkey-born Asimoglu, 57, said he was amazed by the award.
“You never expect anything like this,” he added.
Acemoglu said that the research honored by the award confirms the value of democratic institutions.
“I think in general the work we have done is in the interest of democracy,” he said in a phone call with the Nobel Committee and reporters in Stockholm.
But he added: “Democracy is not a magic solution. Introducing democracy is very difficult. “When you bring up elections, it sometimes creates conflict.”
In an interview with The Associated Press, Robinson, 64, said he doubted China’s ability to maintain its economic prosperity as long as it maintains an oppressive political system.
“There are many examples in world history of societies like that that have been doing well for 40 or 50 years,” Robinson said by phone. “What you see is that this is very unsustainable. The Soviet Union did well for 50 or 60 years.”
Robinson said many communities have successfully transitioned to what he, Acemoglu and Johnson call an “inclusive community.”
“Look at the United States,” Robinson said. “This was a country of slavery and privilege, where women were not allowed to participate in the economy or vote.”
“Every country that is currently relatively open and inclusive has made this shift,” he added. In the modern world, you’ve seen it in South Korea, in Taiwan, and in Mauritius.
Acemoglu and Robinson wrote the best-selling book in 2012 called Why Nations Fail: The Origins of Power, Prosperity, and Poverty, which argued that man-made problems were responsible for keeping countries poor.
In their work, the laureates looked, for example, at the city of Nogales, which straddles the border between the United States and Mexico.
Despite sharing the same common geography, climate and culture, life is very different on both sides of the border. In Nogales, Arizona, to the north, residents are relatively well-off and live long lives; Most children graduate from high school. In the south, in Nogales, Sonora, the population is becoming poorer, and organized crime and corruption are widespread.
The difference, economists found, is the American system that protects property rights and gives citizens a say in their government.
Acemoglu expressed concern on Monday that democratic institutions in the United States and Europe were losing support from the population.
“Support for democracy is at an all-time low, especially in the United States, but also in Greece, the United Kingdom and France,” Acemoglu said on the sidelines of the conference in a suburb of Athens.
“And I think this is a symbol of how disillusioned people are with democracy,” he added. “They believe that democracy has not delivered what it promised.”
Robinson agreed. “It is clear that you have had an attack on the comprehensive institutions of this country,” he said. “You had a presidential candidate who denied losing in the last election. Therefore, President (Donald) Trump rejected democratic rule by citizens. …Of course I’m worried. “I am a concerned citizen.”
Johnson told the Associated Press that economic pressures are alienating many Americans.
“A lot of people who were previously middle class have been hit hard by the combination of globalization, automation, the decline of trade unions and kind of a broader shift in corporate philosophy,” Johnson said. “So instead of workers being a resource to be developed, as they were in the 19th and early 20th centuries, they have become a cost to be minimized…and now that has put pressure on the middle class.”
“We have failed as a country in recent decades to do what we were once good at, which was sharing prosperity,” Johnson said.
Johnson said one of the keys to the future is how societies manage new technologies such as artificial intelligence.
“AI can go either way,” he said. “AI could either empower highly educated people, make them more highly skilled, or enable them to do more tasks and get paid more. Or it could be another huge wave of automation that drives the remains of the middle down.” And then, yeah, you won’t like the political results.
In their work, economists studied the institutions created by European powers such as Britain and Spain when they colonized much of the world starting in the 17th century. They brought different politics to different places, giving later researchers a “natural experiment” to analyse.
Colonies with sparse populations showed less resistance to foreign rule and thus attracted more settlers. In those places, colonial governments tended to create more comprehensive economic institutions that “incentivized settlers to work hard and invest in their new homeland.” This, in turn, led to them demanding political rights that gave them a share of the profits, the Nobel Committee said.
In more densely populated places that attracted fewer settlers, colonial regimes restricted political rights and created institutions that focused on “benefiting local elites at the expense of the broader population.”
“Ironically, this means that the parts of the colonial world that were relatively more prosperous about 500 years ago are now relatively poor,” she added, noting that India’s industrial production exceeded that of the American colonies in the 18th century.
The Economics Prize is officially known as the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel. It was established by the central bank in 1968 as a memorial to Nobel, the 19th-century Swedish businessman and chemist who invented dynamite and established the five Nobel Prizes.
Although Nobel Prize supporters stress that the Economics Prize is not technically a Nobel Prize, it is always presented with the other prizes on December 10, the anniversary of Nobel’s death in 1896.
The Nobel Prizes were announced last week drug, Physics, chemistry, Literature and peace.
___
Corder reported from The Hague, Netherlands, and Weissman from Washington. AP reporters David Keaton in Berlin and Elena Bekatoros in Athens contributed to this report.
“Internet practitioner. Social media maven. Certified zombieaholic. Lifelong communicator.”