The Centre for Economic and Social Studies (CESS), Hyderabad, under its Division for Graduate Studies (DGS) hosted a special lecture on “The 2024 Nobel Prize in Economics – Institutions and Beyond” on 12th March 2025 at the First Floor Seminar Hall, CESS Main Building.
Dr. Alivelu Kasturi, Dean, DGS, welcomed the speaker, Prof. Chandrahas Deshpande, Professor of Economics, Welingkar Institute of Management Development and Research, Mumbai, Prof. E. Revathi, Director, CESS, faculty members, and scholars. She also provided a brief introduction about the speaker and shared insights on the Division for Graduate Studies (DGS) and its academic initiatives.
The lecture provided an in-depth exploration of the 2024 Nobel Prize in Economic Sciences, awarded to Daron Acemoglu, Simon Johnson, and James A. Robinson (AJR Trio) for their research on how institutions are formed and their role in shaping economic prosperity. Prof. Chandrahas Deshpande traced the evolution of institutional economics, referencing influential thinkers such as Thorstein Veblen, John R. Commons, Joseph Schumpeter, and John Kenneth Galbraith, and discussed the early mentions of institutions in the Nobel citations for Friedrich Hayek and Gunnar Myrdal (1974). The session highlighted Ronald Coase’s contributions to transaction cost concept and Douglas North’s definition of institutions as “rules of the game… humanly devised constraints.” The discussion also touched upon the microeconomics of institutions, drawing on the works of Elinor Ostrom and Oliver Williamson, along with recent contributions like Pranab Bardhan, Steven Durlauf, Avner Greif, Joel Mokyr, and Sheilagh Ogilvie.
Further, the lecture examined institutional studies in the Indian context, highlighting research by AG, K-M-V, Somanathan, and Kaivan Munshi. Moving beyond traditional institutional frameworks, the session explored the integration of culture and institutions, referencing the work of Acemoglu, Alberto Alesina, and Joel Mokyr. Prof. Deshpande also reflected on recent research on economic growth theories and the role of institutions, drawing insights from Daniel Susskind. Special attention was given to Acemoglu’s recent treatises, The Narrow Corridor and Power and Progress, which extend beyond institutions to examine broader political economy and development issues.
Prof. Chandrahas Deshpande highlighted the significance of the AJR Trio’s contributions as a major milestone in the evolution of research on institutions as a “fundamental cause of development.” He discussed their influential framework distinguishing between Economic Institutions (EIs) and Political Institutions (PIs), particularly the concepts of ‘Inclusive’ vs. ‘Extractive’ institutions and their implications for economic growth and governance. A key focus of the session was AJR’s landmark book, Why Nations Fail, which has shaped contemporary discussions on institutional economics. Prof. Deshpande elaborated on its salient features, key arguments, and the broader policy implications, while also addressing notable critiques of their work.
Prof. E. Revathi explored the role of institutions in economic growth, referencing Acemoglu’s research and the CESS Ph.D. paper on Development Paradigms. She highlighted how informal institutions can lead to negative outcomes in heterogeneous societies like free-rider problem, citing issues like bonded labor, child mortality and income inequalities in India. She contrasted this with Western offshoots, where institutions drove economic success, while West African colonies remained underdeveloped due to extractive institutions. She also emphasized the correlation between institutions and economic progress, noting that inclusive institutions like the judiciary, intellectual property rights and environment play a crucial role in fostering development.
The lecture concluded with a summation of AJR’s lasting contributions to the field of development economics and their influence on modern institutional research.