Institutionalised Nobel - A Journey from Lewis to AJR

This year’s Nobel Prize in Economics has been conferred to Daron Acemoglu, Simon Johnson and James Robinson (AJR) who empirically tried to discover the reasons why some countries are rich and others are poor. They demonstrated a link between social institutions and economic prosperity. In AJR, we actually see two types of economies – failed institutions and successful institutions. In Arthus Lewis’ model, the institutional set up was implicit, but it was explicit in AJR. But, the process of capital accumulation and growth that was so fundamental to Lewis is not discussed in AJR. Thus, we can view them as emphasizing two different aspects of development – the capital accumulation process (Lewis) and the socio-political set up (AJR). The Lewis model assumes the flow of labour from the informal to the formal sector, creating wealth and capital accumulation in one sector while the other sector remains stagnant. This view of Lewis can well capture the process of colonial extraction and exploitation from one area to another. It is a clear pointer to the fields untraced by AJR. This again links the two

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