The Connection between Institutions and Economic Development – the Work of the 2024 Nobel Laureates in Economics

Abstract

In 2024, the Nobel Prize in Economic Sciences was shared between Daron Acemoglu, Simon Johnson and James Robinson for their research on ‘the formation of institutions and their impact on development’. One fundamental question in economics is why different countries have reached radically different levels of development. It is now generally accepted that the role of the institutions that regulate the functioning of the economic and political system is pivotal in this issue. The laureates made a huge step forward in exploring the causal link between institutions and economic development. They convincingly demonstrated that the adequate protection of property rights had a substantial positive impact on long-term economic development. Another key scientific achievement of the researchers was the endogenisation of the formation and evolution of institutions. The research programme of Acemoglu and Robinson shed light on why and under what circumstances policymakers choose institutions that help (or hinder) economic development.