IN the complex and often tumultuous narrative of global inequality, the 2024 Nobel Prize in Economics awarded to Daron Acemoglu, James A. Robinson and Simon Johnson has reignited the debate over the legacy of colonisation.

Their groundbreaking research, which highlights how the nature of institutions established during colonial times conti-nues to shape nations’ economic destinies, has undoubtedly struck a chord with those concerned about the persistence of global inequality.

Acemoglu, Robinson and Johnson argue that the key driver of inequality today lies in the institutional frameworks left behind by colonial powers. They further contend that in many instances, the colonisers designed institutions to exploit resources and subjugate local populations, leaving a legacy that hampers post-colonial nations’ ability to achieve lasting economic prosperity.

Undoubtedly, there is a significant body of evidence supporting this premise, especially in regions where European colonial powers concentrated on resource extraction, such as parts of Africa and Latin America. Nations in these regions have struggled with poverty as well as inequality partly due to the institutional constraints imposed by their colonial histories.

However, though well-supported, this argument fails to fully account for the varying outcomes in nations that experienced similar forms of colonisation. Take, for instance, Pakistan and India — two nations that emerged from British colonial rule in 1947. Both inherited an economic system built around a colonial framework, yet their post-independence trajectories diverged sharply.

As such, India, despite its colonial past, has transformed into one of the world’s largest and fastest-growing economies. While it grapples with inequality, it has made significant strides in technology, manufacturing and human capital dev-elopment. Key to this success has been India’s democratic framework, which, despite its imperfections, has allowed for a more inclusive approach to economic policy-making and governance.

In contrast, Pakistan, which shares the same colonial inheritance, has faced significant challenges. Corruption, weak institutions, political instability, and a lack of long-term vision have prevented it from achieving sustained economic growth. These problems are not solely the result of colonialism, but are deeply tied to governance failures and political decisions made in the decades following independence.

It is here that the limitations of the Nobel laureates’ theory become evident. Colonial legacies may have set the stage, but the subsequent choices made by polit-ical leaders and the political culture that evolved post-independence played a rather crucial role in determining the country’s economic trajectory.

Bangladesh offers another compelling case. Despite being a part of Pakistan until 1971, Bangladesh’s progress in the last few decades has been remarkable. Overcoming the debilitating legacy of partition, war and poverty, Bangladesh has made significant strides in poverty reduction, economic growth and social development.

With a meticulous focus on education, women’s empowerment, and investment in infrastructure, Bangladesh has clearly demonstrated that even countries with challenging historical and colonial backgrounds can achieve substantial progress if they focus on strengthening their institutions and leaderships.

The narrative of authoritarian regimes also adds an important layer to this critical discussion. While the Nobel-winning research highlights how inclusive insti-tutions drive prosperity, it is essential to acknowledge that authoritarian regimes do not always hinder progress.

China, despite its authoritarian nature, has lifted millions out of poverty and emerged as a global economic powerhouse. The country’s strong central planning, investment in infrastructure, and focus on innovation have played significant roles in its rise. While democracies tend to offer more inclusive and stable fram-eworks for growth, authoritarian regimes, when led by effective leaders, can also achieve remarkable results.

While the Nobel laureates have broadly contributed valuable insights into the relationship between institutions and inequality, their focus on colonial legacies alone utterly fails to account for the full complexity of development.

No doubt, the outcomes of colonisation may have set the stage, but it is the choices made in the post-colonial period that dete-rmined progress, or lack of it, in each case.

Majid Burfat
Karachi

Published in Dawn, October 23th, 2024