DAILY CURRENT AFFAIRS IAS | UPSC Prelims and Mains Exam – 15th October 2024
Archives (PRELIMS & MAINS Focus) A NOBEL PRIZE FOR EXPLAINING WHY NATIONS FAIL OR SUCCEED Syllabus Prelims & Mains – ECONOMY Context: The 2024 Economics Nobel was awarded to U.S. economists Daron Acemoglu, Simon Johnson and James A. Robinson “for studies of how institutions are formed and affect prosperity.” The prize committee credited the winners for enhancing our understanding of the root causes of why countries fail or succeed. Background: – Why some countries are rich while others are poor is a question that has been debated by economists for a long time now. What is the significance of the work of this year’s economics Nobel prize winners? According to the Nobel committee, the richest 20% of countries in the world today are 30 times richer in terms of average income than the poorest 20%. Various theories have been proposed to explain the huge difference in living standards in rich versus poor countries. Some have blamed colonialism as the primary reason for the Western world’s prosperity. Others have argued that disparities in natural resource endowment explains differences in prosperity. Some others have argued that intelligence and even historical accidents could explain a nation’s fate. The 2024 Nobel laureates, however, have argued that differences in the quality of economic and political institutions is what best explains the divergence in the economic fates of countries. This thesis is elaborated in the 2012 book Why Nations Fail: The Origins of Power, Prosperity, and Poverty written by Daron Acemoglu and James A. Robinson, and also in the 2004 paper Institutions as a Fundamental Cause of Long-Run Growth, written together by all three of this year’s Nobel laureates. Why is the quality of institutions so important? Institutions are the “rules of the game” that define the incentives that individuals face when dealing with each other. For example, institutions that stop the State from seizing the property of honest citizens would give citizens the incentive to work hard without the fear of expropriation and that in turn would lead to economic prosperity. Institutions that legalize expropriation, on the other hand, would affect individual incentives negatively and cause economic stagnation. Now, Acemoglu and Johnson argued in their book that institutions can either be “inclusive” or “extractive”. Inclusive institutions are characterized by secure private property rights and democracy while extractive institutions are marked by insecure private property rights and the lack of political freedom. They tried to empirically demonstrate that inclusive institutions lead to long-run economic growth and higher living standards while extractive institutions lead to economic degradation and poverty. To this end, they studied the institutions that colonists set up in different colonies and the impact that they had. When a colonial power did not want to settle in a country for various reasons (such as higher mortality rates due to geography), it set up institutions that were extractive in nature. Example is the case of Britishers in India. But in countries where colonists wanted to settle for the long-run, they set up inclusive institutions that encouraged investment and long-term growth over short-term plunder. This may have been the case in the United States where the British set up institutions that promoted long-term prosperity. It should be noted that institutions can also include factors like culture, which influence the more explicit “rules of the game” expressed by political and economic institutions. If inclusive institutions are so good for growth, why don’t we have more of them? Rulers face different choices in their respective countries. When the rulers of a country are able to safely extract resources for their personal gains through extractive institutions, the laureates argue, they have little reason to bring in political and economic reforms (or inclusive institutions) that can benefit the wider population over the long run. In such cases, extractive institutions prevail for a really long time as long as the masses do not revolt against the status quo. What’s special about the Nobel prize given to Acemoglu, Johnson, and Robinson? The economics Nobel prize is usually awarded for ground-breaking academic research into topics that are of significant real-world importance. In the last two years, the Nobel prize was awarded to scholars who worked on important questions such as the gender pay gap and the fragility of the banking system. While these topics are no doubt important, they still do not delve deep enough into the more fundamental questions that economics as a discipline was founded to answer. This year’s Nobel prize corrects this flaw by bringing the world’s focus back onto the crucial topic of institutions, which determine the very “rules of the game” in any economy and thus affect literally everything that happens in it. Source: The Hindu SUICIDE AND MENTAL HEALTH Syllabus Mains – GS 1, GS 2 Context: Weeks after a final-year student died allegedly by suicide in his hostel room at the Indian Institute of Management (IIM), Ahmedabad, the institute’s students’ council has demanded setting up of a committee to probe into the circumstances surrounding the death. Background: – According to the annual report of the National Crime Records Bureau (NCRB), 1.64 lakh people died by suicide in 2021 — an increase of 7.2 per cent from 2020. In the past three years, the suicide rate in the country has increased from 10.2 to 11.3 per 1,00,000 population. Most suicides in India are by youth and middle-aged adults — with 65 per cent of the suicides in 2020 being reported in the age group of 18-45 years. Key takeaways According to WHO, the link between suicide and mental disorders (in particular, depression and alcohol use disorders) and a previous suicide attempt is well established in high-income countries. However, many suicides happen impulsively in moments of crisis with a breakdown in the ability to deal with life stresses, such as financial problems, relationship disputes, or chronic pain and illness. In addition, experiencing conflict, disaster, violence, abuse or loss and a sense of isolation are strongly associated with suicidal behaviour. Suicide rates are also high among vulnerable groups who experience discrimination, such as
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