The 2024 Nobel Prize for Economics has been awarded to three American professors — Daron Acemoglu, Simon Johnson and James A Robinson — over their research into wealth inequality among the countries of the world. They examined various political and economic systems introduced by European colonisers and demonstrated the relationship between societal institutions and prosperity of the colonised countries.
According to the three researchers, Europe introduced two divergent political and economic systems in the countries they colonised: the extractive system and the inclusive system. Extractive institutions were formed in some countries where the aim was to exploit indigenous population and extract resources for the advantage of the colonisers. In some other counties, the colonisers introduced inclusive institutions for the long-term benefit of European migrants. The research found that the countries with extractive institutions remained poor because the system was providing short-term gains for the people in power, ensuring continuity of their tenure. On the other hand, the countries where inclusive institutions were formed made tremendous economic progress because political and economic systems provided opportunities for everyone.
I think we, in Pakistan, have been practising the extractive political and economic system which has resulted in growing poverty and economic inequality. We must learn from the Nobel laureates’ research.
Ejaz Ahmad Magoon
Dubai
