Let's start with the basics: economic growth comes from available natural, technical and labor resources. So, countries that are large and populous should be richer than small countries. Meanwhile, the Russian Federation, the largest country in the world, produces about as much as Spain or the Netherlands. Hence the simple conclusion that resources can be used more or less efficiently. For example, Bangladesh, a poor, small country formed in the 1970s as a result of India's civil war, has achieved incredible economic success in recent years by producing clothes for the fast fashion market. Unfortunately, high productivity has only been achieved in this narrow sector. When the seamstresses educated their children in universities to provide them with a better life, they found that there was no place for them in Bangladesh. The students took to the streets and brought about a change in government - an example of trying to change the institutions that limit a country's development.
Economic institutions are the primary cause of the disparity of wealth in the world: 20% of countries generate almost all the world's wealth. Institutions include all the structures, rules and norms of economic life, such as property rights, commercial law, and the way businesses are organized. But the relationship between institutions and economic development is complex and bidirectional. Nobel laureates have devoted a great deal of research to trying to show what institutions cause differences in prosperity, what causes their creation and maintenance, and how they can be changed. From a historical perspective, colonization has contributed to changes in institutions in many regions of the world and the decline of rich countries.
Institutions (in the sense defined above) and economic growth are slow processes, so researchers need decades or even centuries of data to develop new theories. Recall, then, that Europe was a poor, dark corner of the world until the late 18th century. A series of revolutions and wars in the 19th century led to the rebuilding of institutions and the emergence of modern democratic states that succeeded in building capitalist economies. The new institutions were transferred with the white settlers to countriessuch as the US, Canada and Australia. Unfortunately, this did not happen in countries that were less attractive to settlers or highly populated, where settlers were not needed. These countries were left with colonial institutions geared toward the exploitation of local resources by the authorities.
Poles experienced the beneficial effects of changing institutions as a result of the social upheaval of 1989. It is clear to us that the institutions of the communist economy are less favorable to national development than capitalist institutions. Who would want to go back to those times and give up the opportunity to benefit from ownership of agricultural land, housing or companies? This year's Nobel laureates show that colonial institutions introduced by Europeans in once-rich countries have similar negative consequences. Unfortunately, decolonization in the second half of the 20th century only resulted in the departure of Europeans without changing the institutions that national elites took over to exploit local economies.
The award-winning researchers thus show that poverty is a consequence of bad institutions, and that changing them requires mass movements that force upheaval, such as the Polish Solidarity of the 1980s.
