THE Nobel Prize in Economic Sciences for 2024 has recently been awarded to three American professors — Daron Acemoglu and Simon Johnson, both teaching at the Massachusetts Institute of Technology (MIT), and James A. Robinson, who is teaching at the University of Chicago.

The three laureates have won the Nobel Prize for research into wealth inequality between different nations of the world. They examined various political as well as economic systems introduced by European colonisers in colonised countries, and demonstrated the relationship between societal institutions and prosperity in those countries.

The Europeans had introduced two divergent political and economic systems in colonised countries; one was extractive, and the other was inclusive. Extractive institutions were formed in some countries where the aim was to exploit indigenous populations and extract resources for the colonisers’ advantage. In other countries, the colonisers introduced inclusive inst-itutions for the long-term benefit of European migrants.

The finding of the research was that the countries with extractive institutions did not achieve good economic progress and remained poor because the system was providing short-term gains for the people in power with guaranteed continuity of having extractive political and economic systems.

On the other hand, where inclusive institutions were formed, the countries made tremendous economic progress because political and economic systems provided opportunities to everyone. In Pakistan, we must learn from this research, for, as I see it, we have been practising the extractive system, which has resulted in poverty and economic inequality. This is too dangerous for the country.

We must form inclusive institutions for the sake of country’s survival and pros-perity. I believe that once we form and practise inclusive political and economic systems, Pakistan will achieve a treme-ndous economic progress within a decade, and have an even brighter future ahead.

Ejaz Ahmad Magoon
Dubai, UAE

Published in Dawn, October 31st, 2024