Planet Money
A Nobel prize for explaining why there's global inequality
Dec 14, 2024
Discover the revolutionary theories from Nobel Prize-winning economists that uncover why some nations thrive while others struggle. They stress the critical role of institutions and challenge long-held economic beliefs. Hear humorous anecdotes about their friendship forged through rigorous discussion and research. The podcast also dives into the historical impacts of colonialism on economic disparity, comparing the growth trajectories of India and China. Finally, it highlights how improving institutions can foster fairer societies and alter national fortunes.
28:29
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Quick takeaways
- The structure of institutions is crucial in determining a nation's economic success, contrasting inclusive systems with extractive ones.
- Historical factors like colonialism significantly influence present global economic disparities, shaping the institutions that govern prosperity today.
Deep dives
The Power of Institutions
Economists have increasingly recognized the significant impact of institutions on a nation's economic success or failure. Recent Nobel Prize winners emphasized that the way societies are organized determines their prosperity. This perspective challenges older models that focused mainly on factors like technology, geography, and education. The core idea is that inclusive institutions foster economic growth, whereas extractive institutions tend to lead to poverty by concentrating power and resources in the hands of a few.
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