Are we talking despotism or race as the culprit?
Copying from the
nobel committees report:
In two seminal papers, Acemoglu, Johnson, and Robinson (2001, 2002) greatly enhanced the study of the impact of economic institutions on economic prosperity. In particular, they employed a design-based – or quasi-experimental – approach using the experience of European colonialism as a “natural experiment”.
In so doing, Acemoglu, Johnson, and Robinson empirically traced the importance and persistence of colonial strategies for subsequent economic development. Their research design centered around the hypothesis that the institutions set up or selectively maintained by colonial powers have had persistent effects on political and economic institutions until today. That is, the type of institutions – inclusive or extractive – observed in many low-income countries today can be partly explained by the fact that colonizers, in some places beginning hundreds of years ago, shaped domestic institutions in a way that was beneficial to themselves. Moreover, what was beneficial to the colonizers, in turn, depended on initial conditions in the colonized areas. Importantly, the initial conditions governing the type of institutions were predetermined and provided quasi-experimental variation to study the impact of institutions on economic prosperity, even for countries under the same colonizer.
Acemoglu, Johnson, and Robinson (2001, 2002) showed that the colonial experience had a major impact on long-run prosperity. Their evidence also suggests that the type of institutions implemented by the colonizers is they key mechanism, although the exact impact of institutional quality on income is difficult to quantify.
Through a series of papers (Acemoglu, 2003, 2006; Acemoglu, Johnson, and Robinson, 2005a; Acemoglu and Robinson, 2000, 2001, 2006b, 2008), the Laureates have helped us understand theoretically why growth-promoting institutions are (or are not) adopted. A key implication of their general model is that inefficient institutions, from a social welfare point of view, are sometimes chosen by political rulers as a way to extract resources from the populace. And once implemented, these inefficient institutions often persist because of an underlying commitment problem. That is, a promise by the “elite” (or an autocrat) to implement a welfare-improving reform of economic institutions is often not credible because the elite have an incentive to ex-post renege on their promise. Similarly, promises by those who argue for institutional reform are also not credible: even if they are willing to compensate the current elite for peacefully agreeing to reform, there are no incentives to compensate the former elite once they have relinquished power. Politically powerful groups may also refrain from institutional change, even if it may be welfare improving, because of concerns about subsequent institutional dynamics, i.e., the risk of losing power.