The 2024 Nobel Prize was awarded to Daron Acemoglu, Simon Johnson, and James A. Robinson for their groundbreaking work on the economic impacts of political systems. They demonstrated how democratic systems foster inclusivity, openness, and sustained growth, while autocracies, despite initial economic gains, often stifle these critical factors over time. By using comprehensive historical data, the researchers provided solid evidence of how political systems impact economic outcomes across centuries.

Tore Ellingsen, Professor of Economics at the Stockholm School of Economics (SSE) and former Chair of the Committee for the Prize in Economic Sciences, emphasizes the significance of these findings:

"This shows that democratic institutions, broadly defined, are good for the people living under them. They are economically beneficial. This has been a hotly debated topic for some time, but the research gives us compelling evidence that autocratic institutions can work well for a while, but ultimately, they stifle innovation and long-term growth."

A timely message for policymakers

The research serves as a timely reminder as democratic systems around the world are under increasing strain.

"Democracy is under more severe threat now than it has been for several decades. This is true even in regions like Europe and the United States. Policymakers should take note of this, when considering reductions in political freedom. And if we want to help other countries economically, we should support their democratic institutions.”

The findings highlight that democratic governance not only supports economic growth but also fosters more inclusive and equitable development by giving more people the opportunity to participate in and benefit from the economy. But as inequality rises and trust in institutions weakens, democratic governments must address these challenges head-on by ensuring that their systems remain inclusive and adaptable to prevent further erosion of support for democratic governance.

"The support for democratic governance is weaker than it has been in a long time. You cannot create as many 'losers' in the system—people who feel excluded or left behind—without risking the stability of democracy itself. We must address the issues causing discontent with democracy if we want to protect it," says Tore Ellingsen.