Read more: Visit websiteThey received the prize for their research into how institutions shape which countries become wealthy and prosperous — and how those structures came to exist in the first place.
The laureates delved into the world's colonial past to trace how gaps emerged between nations, arguing that countries that started out with more inclusive institutions during the colonial period tended to become more prosperous. Their pioneering use of theory and data has helped to better explain the reasons for persistent inequality between nations, according to the Nobel committee.
"Reducing the huge differences in income between countries is one of our times' greatest challenges," Jakob Svensson, chairman of the economics prize committee, said while announcing the award. Thanks to the economists' "groundbreaking research," he said, "we have a much deeper understanding of the root causes of why countries fail or succeed."
Countries with "inclusive" institutions that protected personal property rights and allowed for widespread economic participation tended to end up on a pathway to longer-term prosperity. Those that had what the researchers called "extractive" institutions — ones that helped elites to maintain control, but which gave workers little hope of sharing in the wealth — merely provided short-term gains for the people in power.
"Rather than asking whether colonialism is good or bad, we note that different colonial strategies have led to different institutional patterns that have persisted over time," Dr. Acemoglu said during a news conference after the prize was announced.
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