How three economists changed the way we understand why some nations prosper and others don’t
1. The discovery of an invisible power
There are forces that shape the destiny of countries without our being able to see them. They aren’t natural resources or climate; nor are they technological miracles. They are the rules of the game: the laws, incentives, rights, and institutions that organize economic and political life.
The 2024 Nobel Prize in Economics, awarded to Daron Acemoglu, Simon Johnson, and James A. Robinson, recognizes precisely that: their pioneering work explaining how institutions determine the prosperity or poverty of nations.
Their research gave a convincing — and provocative — answer to one of the oldest questions in economics:
“Why are some countries rich and others poor?”
2. From geography to politics: a paradigm shift
For much of the 20th century, the dominant explanations pointed to “external” factors:
climate, natural resources, or geographic location.
Others, like Max Weber or David Landes, emphasized culture, religion, or the work ethic.
But there was something those theories couldn’t fully explain.
How could North Korea and South Korea, two countries with the same language, culture, and geography, have such different fates?
Why did North America move toward prosperous democracies while much of Latin America remained trapped in cycles of instability?
That’s when Acemoglu, Johnson, and Robinson proposed looking beyond the surface:
not at territory or customs, but at the institutions that regulate who holds power, how it’s exercised, and within what limits.
3. Inclusive or extractive: the two faces of institutions
In their works — especially Why Nations Fail (2012) and The Narrow Corridor (2019) — the authors present a central idea:
Nations prosper when their institutions are inclusive and fail when they are extractive.
Inclusive institutions distribute power broadly, guarantee property rights, foster innovation, and allow for political participation.
Extractive institutions, on the other hand, concentrate power in elites who use the State for their own benefit, blocking progress for the majority.
It’s not just about written laws, but living practices: can a citizen defend their property? Can an entrepreneur innovate without fear of expropriation? Can a worker rise on merit rather than connections?
The answers to those questions, the laureates argue, predict the wealth of nations better than any geographic map or demographic statistic.
4. From history to data: how they proved it
The strength of their proposal lay not only in theoretical elegance, but in the empirical evidence.
Using historical data, the researchers compared European colonies from the 16th to the 19th century and discovered a striking pattern:
where European settler mortality was high, empires established authoritarian systems designed to extract resources;
where it was low, they founded representative, self-governing institutions.
Centuries later, that initial difference was still reflected in per capita income and political development.
Thus, places like Canada, the United States, or Australia evolved into prosperous democracies, while more extractive structures persisted in many regions of Africa and Latin America.
It was a powerful finding because it united history, economics, and politics into a single, quantifiable narrative.
The message was clear: institutional history leaves deep scars.
5. Cracks in the model: dissenting voices
No theory that aims to explain the world escapes debate, and this case is no exception.
Some economists, like Jeffrey Sachs, warn that the institutional approach may underestimate the role of geography and public health.
“Before you build parliaments, you have to survive malaria,” Sachs quips, reminding us that mortality from tropical diseases still determines the fate of millions.
Others, like David Landes or Samuel Huntington, argue that culture — values, religion, work ethic — remains an essential engine of development, something hard to reduce to laws or constitutions.
And then there’s the uncomfortable observation:
how do you explain the success of economies like China or Singapore, which thrive under not-very-inclusive political structures?
For some, these cases show that the relationship between institutions and prosperity isn’t linear, and that authoritarian stability can generate temporary economic growth, albeit with long-term risks.
The laureates themselves acknowledge these tensions. Robinson has said in interviews that “China is growing fast, but we still don’t know whether its institutions will allow it to keep doing so in 50 years.”
Part of their intellectual strength lies in that acknowledgment of limits: offering frameworks for thinking, not dogmas.
6. Lessons for Latin America and Ecuador
If the message from Acemoglu, Johnson, and Robinson is that institutions matter, Latin America offers the perfect laboratory to prove it — the same kind of analysis we saw with the Great Depression and the 2008 crisis: history leaves lasting economic scars.
The region has abundant natural resources, human talent, and access to global markets, but it carries fragile institutions, citizen distrust, and extractive structures that reproduce themselves.
Ecuador is no exception.
The difficulties in consolidating a meritocratic State, high informality, and political volatility are symptoms of an institutional system that has not yet managed to be fully inclusive.
Building it requires more than legal reforms: it demands ethical leadership, legal stability, and civic education.
Herein lies the pedagogical value of this Nobel Prize:
it reminds us that prosperity isn’t decreed, it’s built with fair rules and citizens who believe in them.
7. Beyond economics: a moral lesson
The work of the three laureates goes beyond economics.
It invites us to see progress as a collective project where politics, ethics, and history intertwine.
It reminds us that countries don’t fail for lack of talent, but because of structures that discourage effort and reward closeness to power.
And above all, it gives us hope back:
if institutions are human creations, they can also be reformed by humans.
No country is condemned; it only needs informed, persistent citizens willing to defend rules that benefit everyone.
Ultimately, that is the message FOEC seeks to inspire:
that education and critical thinking are the foundation of inclusive institutions.
Because when we understand the rules of the game, we also discover that we can change them.
Recommended readings
- Daron Acemoglu & James A. Robinson – Why Nations Fail: The Origins of Power, Prosperity, and Poverty (2012).
- Daron Acemoglu & James A. Robinson – The Narrow Corridor: States, Societies, and the Fate of Liberty (2019).
- Simon Johnson & Daron Acemoglu – Power and Progress: Our Thousand-Year Struggle Over Technology and Prosperity (2023).
- Jeffrey Sachs – The End of Poverty (2005) (geographic and public health perspective).
- David Landes – The Wealth and Poverty of Nations (1998).
- Official 2024 Nobel Prize in Economics website: nobelprize.org/prizes/economic-sciences/2024
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