Hyderabad: Experts discussed the work of 2024 Nobel Prize winners in Economics Daron Acemoglu, Simon Johnson and James A. Robinson, who focused on institutions as engines of growth and prosperity of nations. Titled ‘Why Nations Fail’, the invigorating and thought-provoking session was attended by Professor E. Revathi, Director, Center for Economic and Social Sciences (CESS), Amir Ullah Khan, Member, Telangana Public Service Commission (TGPSC) and Mohan Guruswamy, economic and political expert.

Guruswamy, who, like the Nobel laureates, is a Harvard alumnus, mentioned that he met Robinson almost a decade ago. After reading their book, he predicted the prestigious award.

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

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

“All our major institutions are in the cities. Over time, we have also seen a loss of representatives at the local level, not only in the political system, but also in municipalities, police stations, health care and education. Does this make us an extractive society,” he asked at the event organized at the Guruswamy Center in Secunderabad on Saturday.

The Nobel Prize in Economics is actually the Sveriges Riksbank Prize for Economic Sciences, established in memory of Alfred Nobel.

Professor Revathi explained the main argument of the Nobel laureates and stressed that it was not globalization that could be held responsible for increasing income inequality within a region. “Economists present an argument based on three different perspectives: institutional economics, development economics, and economic history. They argue that it is a nation’s institutions that determine its success or failure. This includes no only the economic and political aspects, but also the social and cultural aspects.

“They argue that several paradigm shifts have occurred in the history of nations, such as AI in the current era, that have enabled growth. However, “enabling” nations are those that benefit from the growth brought about by these changes. Therefore, the increase in income inequality is not due to globalization per se,” said Professor Revathi.

“The question then is why is there a disparity in growth, prosperity and power? They argue that people’s value systems, ethics, and economic and social “subsystems” contribute to growth. Capital and labor interact with institutions to bring about this growth,” she explained.

Umar Ullah Khan linked conservations by asking a few questions: “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 an indicator of GDP per capita?

“India ranks fifth in the world in terms of GDP and 150th in terms of GDP per capita. Should we use the human development index to describe the wealth of a nation? Another major aspect addressed by this book is why regulators fail to control technology. The future questions raised by the book: What is the place of climate change and ecology? Is prosperity coming at the expense of institutions that destroy ecology,” asked Umar Ullah Khan.