Introduction to the Event and Keynote Speaker
The World Bank’s Anticorruption for Development Global Forum featured a keynote presentation by Daron Acemoglu, the 2024 Nobel laureate in economics and Institute Professor of Economics at MIT. The event, focused on ‘Harnessing Technology for Transparency, Stronger Institutions, and Prosperity,’ took place on April 9, 2025.
Understanding Institutional Evolution and Prosperity
Acemoglu began by discussing how social forces, innovation, and technology influence institutional evolution over time. He presented a framework for understanding the social forces driving institutional stability and change, and their impact on prosperity. Historical examples, such as European colonialism and the spread of industrial technologies in the 19th century, were used to illustrate how today’s choices around AI adoption could shape future prosperity.
The Role of Institutions in Economic Development
Acemoglu emphasized that institutions are critical for economic development. He presented research, conducted with Simon Johnson and Jim Robinson, on the impact of colonial history on current institutions. The study found that former European colonies exhibit both some of the best and worst institutions today, depending on whether they were settler colonies or subject to indirect rule.
The Relationship Between Institutions and Economic Performance
The research demonstrated a strong causal relationship between institutional quality and economic performance. Using potential settler mortality during the colonial era as an instrument, the study showed that institutional differences caused by colonial experiences explain a significant portion of current economic disparities between countries.
Technology and Institutional Quality
Acemoglu highlighted that the efficiency of production and technology use is influenced by institutional quality. Countries with more extractive institutions tend to have lower total factor productivity and less investment in advanced technologies.
Democracy and Economic Growth
The presentation discussed the positive causal relationship between democracy and economic growth. Analyzing transitions to democracy, Acemoglu showed that countries tend to outperform non-democracies about seven years after democratization, eventually becoming about 20% richer.
Challenges to Democracy and Institutional Trust
Despite the benefits of democracy, Acemoglu noted that support for democratic institutions is declining globally, particularly in industrialized countries. He attributed this decline to democracies failing to deliver on their promises of shared prosperity, effective public services, and citizen voice.
Corruption and Its Impact on Democracy
Corruption was identified as a significant factor eroding support for democracy. Acemoglu cited research showing that high-profile corruption episodes damage public trust in democratic institutions. The presentation emphasized that corruption is not only economically costly but also undermines the fairness and legitimacy of political systems.
Addressing the Challenges: Policy Implications
The discussion concluded with implications for policy and international cooperation. Acemoglu stressed the importance of bottom-up institutional development, sensitive to local contexts and histories. While the role of international organizations is limited, they can play a crucial part in shedding light on corruption and supporting domestic reform efforts.
Conclusion
In summary, Acemoglu’s presentation underscored the complex interplay between technology, institutions, and economic development. The challenge lies in building stronger, more inclusive institutions that can harness technological advancements for the benefit of all, while combating corruption and ensuring that the benefits of growth are shared more equitably.
