On Monday, the Swedish Royal Academy of Sciences announced the recipients of the 2024 Nobel Prize in Economics, the final award in this year’s series.

This year’s prize honors MIT economists Daron Acemoglu and Simon Johnson, along with University of Chicago political scientist James Robinson. The researchers provided an insight into the relationship between institutions and prosperity.

The award came a day after a World Bank report revealed that the world’s 26 poorest countries, home to 40% of its most poverty-stricken people, are, on average, poorer today than they were  before the onset of the COVID-19 pandemic.

The disparity in wealth between nations is significant, and one important explanation for this is the persistent differences in societal institutions.  “Societies with a poor rule of law and institutions that exploit the population do not generate growth or change for the better,” the Swedish Royal Academy of Sciences stated in the Nobel citation.

In a related note, during the 78th session of the United Nations General Assembly last year, Secretary-General Antonio Guterres admitted that the commitments established in 2015 together with the Sustainable Development Goals (SDGs) were only 15 per cent on track, while many are going in reverse.

Despite international commitments, 1.2 billion people are still living in poverty as of 2022, and roughly eight per cent of the global population, or 680 million people, will still be facing hunger by the end of the decade.

This bleak situation is further exacerbated by ongoing conflicts in regions like Africa and the Middle East, where large populations are displaced and struggle to meet basic needs.

The Nobel laureates also stressed a critical issue facing the industrialized world: the erosion of established institutions, adding that the United States presidential election this year might prove extremely consequential.

For further reading, check the publications Why Nations Fail: The Origins of Power, Prosperity, and Poverty, and Power and Progress: Our Thousand-Year Struggle Over Technology and Prosperity.

Sources: Reuters, IDEA, Nobel Prize, MIT