The Nobel laureates, including Daron Acemoglu and Simon Johnson, argue that the quality of political and economic institutions established by colonizers determines a country's prosperity.
The research shows that inclusive institutions for European settlers led to successful societies, while exploitative systems for Indigenous populations resulted in poverty.
The concept of 'reversal of fortune' is emphasized, indicating that countries that were wealthier during colonization often face extreme poverty today because of their historical institutions.
The laureates assert that breaking away from inherited institutions towards democracy and rule of law can improve economic conditions and reduce poverty.
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