Becoming wealthy and successful: what recipe do the 2024 Nobel laureates propose for Ukraine?
The Nobel Prize in Economics: How Institutions Shape the Fate of Nations.
This year, the Nobel Prize in Economic Sciences was awarded to Daron Acemoglu, Simon Johnson, and James A. Robinson for their research on the role of institutions in long-term economic growth. Their work helps to explain why some countries thrive while others struggle with poverty and stagnation.
Inclusive vs. Extractive Institutions
Inclusive institutions promote broad citizen participation in political and economic life. They foster innovation, investment, and equitable resource distribution, leading to sustainable development.
Extractive institutions concentrate power and wealth in the hands of a few. This results in the exploitation of resources without regard for the long-term interests of society, often culminating in economic decline.
Ask yourself — what types of institutions exist in Ukraine, which of them are inclusive and which are extractive, and how has this changed over recent years, especially during the war.
The "Reversal of Fortune" Theory
The laureates introduced the concept of "reversal of fortune," explaining how once-wealthy regions became impoverished due to the establishment of extractive institutions during colonization. For instance, parts of India and South America, which were prosperous before the arrival of colonizers, experienced economic downturns due to the exploitative policies of colonial authorities.
Why Change is Difficult
Inefficient institutions often persist because powerful elites benefit from the status quo and resist reforms. This creates a "commitment problem," where necessary societal changes are blocked in order to maintain the privileges of a few.
What examples of such institutions can you identify in Ukraine? In my educational sector, these include the academies of sciences and state universities. I am sure you could name many similar examples in your own fields or across the country.
Relevance for Ukraine
These insights are extremely important for Ukraine. Since gaining independence, we have faced challenges in building inclusive institutions.
Corruption and vested interests hinder reforms and economic development.
The war with Russia complicates the reform process, as the aggressor seeks to prevent us from establishing democratic institutions. However, at the same time, this war increases the motivation and opportunity for such reforms.
Social movements, such as the Orange Revolution and Euromaidan, demonstrate the Ukrainian people's desire for inclusivity and justice.
The Path to Prosperity
The research by Acemoglu, Johnson, and Robinson emphasizes that sustainable development requires more than just economic reforms or foreign aid. It is essential to:
- strengthen inclusive institutions that ensure the participation of all citizens in the life of the country;
- combat corruption and reduce the influence of vested interests;
- uphold the rule of law and the independence of the judiciary.
Conclusion
The future of Ukraine depends on our ability to build inclusive institutions that promote economic growth and strengthen sovereignty. The experiences of other countries and the research of current Nobel laureates demonstrate that this is the path to prosperity and stability.
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