This year, the Nobel Prize in Economics was awarded to three scholars, and Professor Chiu Da-Sheng from National Dong Hwa University commented on the significance of their work. On the 14th, he noted that the trio has long focused on the impact of policies on the economy and has dedicated their research to narrowing the wealth gap between nations. Their recognition reflects the current academic community’s emphasis on the critical issue of income disparity among countries.
Professor Chiu Jun-Rong from National Central University added that the awardees’ theories align closely with institutional economics. He explained that while the fundamental principle of economics revolves around market economies, it is essential for governments to not only comply with market forces but also to guide these mechanisms through effective institutional frameworks. This approach aims to enhance the efficiency of resource allocation, allowing everyone to benefit from economic growth.
Chiu Da-Sheng emphasized that all three laureates advocate for the significance of “institutions” in driving prosperity. They focus on researching ways to bridge the substantial income gaps between nations, which he identified as one of the biggest challenges of our era. He pointed out alarming statistics: the wealth of the wealthiest 20% of countries is 30 times greater than that of the poorest 20%, and while the rich continue to amass wealth, poorer nations struggle to close the gap.
Chiu Jun-Rong also highlighted the awardees’ contributions in helping us understand the reasons behind the disparities in prosperity among countries. Their work underscores the critical role that social institutions play in national wealth. Essentially, while market economies are foundational to economics, governments must strike a balance between adhering to market dynamics and making necessary corrections. By establishing sound institutions that guide economic development positively, resource allocation can become more efficient, allowing people to share in the fruits of economic success.
Conversely, if the social systems and incentives set by the government conflict with market principles, society could lose its potential benefits and even suffer. Therefore, it’s crucial that the systems designed by the government align well with the socio-cultural characteristics of the country to foster beneficial outcomes.
