Institutions rule: This year's Economics Nobel

Why Colonial Origins of Comparative Development is Nobel-worthy

- ARVIND SUBRAMANIAN

When I first read the “Colonial Origins of Comparative Development,” (COCD) by Daron Acemoglu, Simon Johnson and James Robinson (AJR) more than 20 years ago, I was smitten. So much so that I told several colleagues at the International Monetary Fund that the paper would one day win the Nobel Prize. I say this not to trumpet my predictive abilities (mostly poor) but to illustrate that Keatsian sense of being awestruck: “Then felt I like some watcher of the skies, When a new planet swims into his ken.”

At that time, pioneered by Robert Barro, an entire sub-discipline of economics was striving to explain the differential economic growth performance of countries in the post-World War II period. Around that time too, Jared Diamond had produced his tome, “Guns, Germs and Steel”—breathtakingly magisterial and multi-disciplinary in method—and yet able to advance a mono-causal explanation for the most fundamental development question: Why are some countries rich and others poor? Diamond’s answer was: It’s all about geography.

COCD came along to offer a counter-explanation, but did so differently. COCD drew upon history, unearthed imaginative historical data, deployed it in a simple, comparative and quantitative, economic setting and produced an answer that was striking and plausible. It is hard to convey how audaciously creative and parsimonious COCD was in that combination of setting, method, data and narrative.