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

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  • Istvan Konya

    (Corvinus University of Budapest, Centre for Economic and Regional Studies)

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.

Suggested Citation

  • Istvan Konya, 2025. "The Connection between Institutions and Economic Development - the Work of the 2024 Nobel Laureates in Economics," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 24(1), pages 132-155.
    • Handle: RePEc:mnb:finrev:v:24:y:2025:i:1:p:132-155
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    References listed on IDEAS

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    1. James W. Friedman, 1973. "A Non-cooperative Equilibrium for Supergames: A Correction," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 40(3), pages 435-435.
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    3. Daron Acemoglu & James A. Robinson, 2001. "A Theory of Political Transitions," American Economic Review, American Economic Association, vol. 91(4), pages 938-963, September.
    4. Leandro Medina & Mr. Friedrich Schneider, 2018. "Shadow Economies Around the World: What Did We Learn Over the Last 20 Years?," IMF Working Papers 2018/017, International Monetary Fund.
    5. Daron Acemoglu & James A. Robinson, 2008. "Persistence of Power, Elites, and Institutions," American Economic Review, American Economic Association, vol. 98(1), pages 267-293, March.
    6. Acemoglu, Daron, 2003. "Why not a political Coase theorem? Social conflict, commitment, and politics," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 620-652, December.
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    Keywords

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    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • P14 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Property Rights
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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