Institutional and economic development generally occur simultaneously, making it difficult to know which is causing which. This year’s Nobel laureates in economics tackled this question by examining the trajectories of former European colonies, starting with the mortality rate of settlers at the time of colonization.
CAMBRIDGE – Why have some countries grown rich and others not? The three winners of this year’s Nobel Prize in Economic Sciences – Daron Acemoglu, Simon Johnson, and James A. Robinson – offer a simple answer: institutions. Countries with “inclusive” institutions – which underpin an open society, accountable government, economic freedom, and the rule of law – do better than those with “extractive” institutions that reward those in power.