Overview

• The Nobel Prize in Economics honors research that highlights the role of 'inclusive' versus 'extractive' institutions in shaping national wealth.
• Acemoglu, Johnson, and Robinson argue that countries with inclusive institutions, which promote democracy and rule of law, are more prosperous.
• Their work suggests that the colonial legacy of institutional development has long-term effects on modern economic disparities.
• Critics question the empirical robustness of their findings, pointing to alternative explanations such as human capital and cultural factors.
• The research has sparked calls for institutional reforms in countries like China, where economic growth is challenged by existing governance models.