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Daron Acemoglu, Simon Johnson, and James A. Robinson join the ranks of Nobel Laureates as the winners of the 2024 prize.

What makes one nation prosper while another struggles? It’s a question that has fueled debates for centuries, with answers ranging from geography to culture to resources. But this year, three economists who turned the spotlight to an often-overlooked culprit have been awarded the highest honor within the field. And the culprit is? Institutions.

Daron Acemoglu, Simon Johnson, and James A. Robinson have spent much of their careers trying to better understand and explain how political and economic systems can make or break a country’s prosperity. Their research has revealed that when institutions are inclusive, when they promote participation and protect citizens’ rights, societies flourish. When they are extractive, when they concentrate power and exploit the population, progress stalls.

It’s a powerful idea, that the fate of nations doesn’t rest on the land they occupy or the riches buried beneath it, but on how they are run and by whom. This year’s Nobel Laureates have demonstrated, through a blend of historical case studies and rigorous economic analysis, that institutions are the beating heart of economic development. Countries with strong, fair institutions grow. Those without remain trapped in cycles of poverty and inequality. Their work challenges us to reconsider the foundations of prosperity itself.

For those familiar with their groundbreaking book Why Nations Fail, Acemoglu and Robinson’s ideas will ring familiar. Along with Johnson, they have shown that nations with a weak rule of law or those built on exploitation tend to stifle innovation and economic progress. It’s not just a matter of corruption or bad governance in the abstract, it’s the structure of the institutions themselves that determine the future. It’s the difference between a nation that cultivates opportunities for all and one that siphons wealth into the hands of a few. Acemoglu, Johnson, and Robinson’s work has given a framework for understanding how political power shapes economic outcomes and how history often locks societies into paths of prosperity or stagnation.

Their work speaks directly to policymakers and global leaders grappling with the root causes of inequality and economic underdevelopment. The real-world applications are profound as it begs the question, how can we expect economic growth in countries where corruption is rampant, or in regions governed by elites who use institutions as tools of repression rather than engines of opportunity? Acemoglu, Johnson, and Robinson's contributions suggest that economic aid or development programs will only succeed if they come hand-in-hand with institutional reform. This message echoes across recent debates on international development, calling for a deeper focus on governance. Without strong, inclusive institutions, even the most well-intentioned economic policies may be doomed to fail.

Looking at previous Nobel winners in this space, their work also resonates with that of Abhijit BanerjeeAbhijit V. Banerjee, Esther DufloEsther Duflo, and Michael KremerMichael R. Kremer, the 2019 Laureates who focused on poverty alleviation. While Banerjee, Duflo, and Kremer used randomized controlled trials to measure what works in development policy, Acemoglu, Johnson, and Robinson tackle the broader question of why certain countries remain poor in the first place. Both groups of scholars emphasize the importance of moving beyond one-size-fits-all solutions, offering more nuanced approaches that account for political realities and structural inequalities.

In honoring Acemoglu, Johnson, and Robinson, the Nobel Committee has highlighted not just an academic breakthrough, but a truth with far-reaching consequences: the rules of the game matter, and if we want a better future, it’s time to rewrite them.