Nobel winners’ works on growth come to the fore

Hyderabad: Experts discussed the work of Nobel Prize winners for economics for 2024, Daron Acemoglu, Simon Johnson and James A. Robinson, which focused on institutions as drivers of growth and prosperity in nations. Titled ‘Why Nations Fail,’ the invigorating and thought-provoking session featured Prof. E. Revathi, director, Centre for Economic and Social Sciences (CESS), Amir Ullah Khan, member of Telangana Public Service Commission (TGPSC) and Mohan Guruswamy, economic and political expert.

Guruswamy, who, like the Nobel winners, is a Harvard alumnus, mentioned that he had met Robinson almost a decade back. After reading their book, he had predicted the prestigious prize.

In his address, Guruswamy highlighted the role urbanisation plays in driving the economy of a society, keeping other aspects such as geography and social demography constant.

"The book compares the growth in Nogales in Arizona and Sonora in Mexico, divided by the US-Mexican border, which are almost similar in all other aspects like language, Latino population, etc. This helps us look at India: are we an extractive society or the one that shares its resources with people,” Guruswamy asked.

“All our major institutions are in the cities. Over time, we have also seen the loss of local-level representatives not only in the political system but also in the municipalities, police stations, healthcare and education. Does it make us an extractive society," he questioned, at the event held at the Guruswamy Centre in Secunderabad on Saturday.

The Nobel Prize in economics is actually the Sveriges Riksbank prize in economic sciences, instituted in the memory of Alfred Nobel.

Prof. Revathi explained the primary argument of the Nobel winners and emphasised that it was not globalisation that could be held responsible for the rise of income inequalities within a region. "The economists provide an argument shaped from three different perspectives: institutional economics, development economics and economic history. They argue that it's the nation's institutions that determine its success or failure. It not only includes the economic and political aspects but social and cultural aspects also.”

“They argue that several paradigm shifts have emerged in history of nations, such as AI in present times, which have enabled growth to take place. However, 'enabling' nations are those that take the opportunity of the growth brought about by these shifts. Hence, the rise in income inequality is not because of globalisation per se,” Prof. Revathi said.

“Then the question is why is there a disparity in growth, prosperity and power. They argue that people's value systems, ethics, economic and social 'subsystems' contribute to growth. Capital and labour interact with institutions to bring about this growth," she explained.

Umar Ullah Khan bound the conservations together by throwing some questions in the mix: "Why do some countries do well? This is not a new question from an academic point of view. Should GDP be an indicator of growth or GDP per capita?”

“India is fifth in the world in terms of GDP and 150th in terms of GDP per capita. Should Human Development Index be looked at to describe the wealth of a nation? Another major aspect that book touches upon is why regulatory bodies fail to control technology. The questions for the future that the book brings up: Where is the place for climate change and ecology? Does prosperity come at the cost of institutions that destroy the ecology," Umar Ullah Khan asked.