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Societal Institutions have critical role in determining prosperity: Economics Nobel winners

Understanding Prosperity: Insights from Nobel Laureates Acemoglu, Johnson, and Robinson

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Acemoglu, Johnson, and Robinson. Image credit: Niklas Elmehed © Nobel Prize Outreach

This year’s Nobel laureates in economic sciences—Daron Acemoglu, Simon Johnson, and James Robinson—have shed light on the critical role that societal institutions play in determining a nation’s prosperity. Their research highlights that countries with weak rule of law and exploitative institutions often fail to achieve economic growth or positive change.

The legacy of European colonization serves as a key context for their findings. As colonizers expanded into various regions, the institutions established in these societies were altered significantly, though the extent and nature of these changes varied widely. In some areas, the primary goal was to exploit indigenous populations and extract resources for the benefit of the colonizers. In contrast, other regions saw the establishment of inclusive political and economic systems designed to benefit European settlers over the long term.

The laureates argue that one of the fundamental explanations for disparities in prosperity between nations lies in the types of societal institutions that were implemented during colonization. Often, inclusive institutions were introduced in poorer countries at the time of colonization, leading to the development of generally prosperous populations over time. This historical context offers critical insights into why some former colonies that were rich in resources have become impoverished, while others that began with little have thrived.

However, many nations find themselves trapped in a cycle of extractive institutions and low economic growth. Although the introduction of inclusive institutions could yield long-term benefits for the broader population, those in power are often incentivized to maintain the status quo, which provides them with short-term gains. As long as the political system ensures their control, public trust in promises of economic reform remains elusive. According to the laureates, this lack of trust is a primary reason for the stagnation observed in many societies.

Interestingly, the inability to credibly promise positive change can also explain why democratization occurs in some contexts. When faced with the threat of revolution, political leaders confront a dilemma: they may prefer to cling to power while attempting to appease the masses with promises of reform. Yet, the populace remains skeptical, fearing a return to old practices once the immediate threat subsides. In such scenarios, the only viable path forward may involve transferring power and establishing a democratic system.

“Reducing the vast differences in income between countries is one of our time’s greatest challenges,” remarks Jakob Svensson, Chair of the Committee for the Prize in Economic Sciences. The work of Acemoglu, Johnson, and Robinson underscores the importance of societal institutions in addressing these disparities and fostering equitable economic growth across nations.

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Health Challenges Intensify Amid Climate Change, Zoonotic Diseases: WHO former Chief Scientist

Dr. Soumya Swaminathan explains that most emerging viral threats today are zoonotic infections, transmitted from animals to humans, which are becoming more frequent due to environmental factors exacerbated by climate change

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Amid rising concerns over climate change and its impact on human health, Dr. Soumya Swaminathan, the former Chief Scientist of the World Health Organization (WHO), highlighted the pressing challenges facing global health, particularly the rise of zoonotic diseases, antimicrobial resistance, and the growing threat of climate change.

Dr. Swaminathan made these remarks at an event in Cochin, the bustling port city in the southern Indian state of Kerala, on January 25, 2025. The event marked the launch of several initiatives as part of a significant research project on water quality and waterborne diseases in Vembanad Lake at the ICAR-Central Marine Fisheries Research Institute (CMFRI). Dr. Swaminathan stressed the urgency of addressing these interconnected global health issues.

She explained that most emerging viral threats today are zoonotic infections, transmitted from animals to humans, which are becoming more frequent due to environmental factors exacerbated by climate change. “Most of the health threats today originate from environmental factors,” she said, calling for a stronger focus on integrated research. This includes collaboration across weather, climate, health, and environmental data to predict and prevent future outbreaks of infectious diseases.

Dr. Swaminathan also called for the establishment of an Environmental Health Regulatory Agency in India to better manage the risks posed by climate change and other environmental factors. “We need a more systematic and comprehensive approach to protecting public health,” she noted.

Dietary Risks and Non-Communicable Diseases

In addition to environmental concerns, Dr. Swaminathan raised alarms about the rising health risks linked to poor diets. “Half of Indians cannot afford a nutritionally sufficient healthy diet,” she revealed, highlighting the growing crisis of malnutrition, obesity, anaemia, and micronutrient deficiencies in the country. She particularly pointed to South Indian states Kerala and Tamil Nadu, where these health issues are escalating, despite the rising rates of obesity and non-communicable diseases.

Dr. Swaminathan also called for the establishment of an Environmental Health Regulatory Agency in India to better manage the risks posed by climate change and other environmental factors

Dr. Swaminathan emphasized the untapped potential of marine resources as a key solution to improving nutrition in India, urging for a greater focus on incorporating these resources into the national diet to combat these nutritional challenges.

Climate Change and Public Health

The devastating effects of climate change were another focal point of Dr. Swaminathan’s remarks. “India is one of the most vulnerable countries to climate change,” she warned. “Almost the entire population is exposed to climate hazards such as floods, droughts, cyclones, and extreme heat, which are detrimental to both physical and mental health.” She pointed out that the most vulnerable populations, including the poor, are hit hardest by these hazards and called for enhanced adaptation strategies and resilience-building measures to mitigate these impacts.

Collaboration and Citizen Science: A Path Forward

Dr. Swaminathan also underscored the importance of collaboration between government agencies, research institutions, and local communities in tackling these multifaceted health challenges. She highlighted the role of citizen science initiatives in empowering communities and gathering valuable data.

Reflecting on the success of the global scientific response to COVID-19, she praised the unprecedented collaboration and data-sharing that led to the rapid development of vaccines. “During my time at the WHO, I witnessed first-hand the extraordinary level of networking and data sharing,” Dr. Swaminathan said. “Scientists prioritized rapid dissemination of findings over individual publication, which paid off.”

However, she also warned about the dangers of misinformation, particularly in the digital age, where misleading health advice can easily spread on social media. “This was evident during the COVID-19 pandemic, when everyone considered themselves an ‘expert’ and offered advice to the public,” she said, stressing the need for clear, evidence-based communication.

Dr. Swaminathan also praised Kerala’s proactive approach to public health, particularly in effectively containing the Nipah virus, which serves as a model for other states in India.

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From Failure to Fortune: How Pivoting Drives Entrepreneurial Success

So, what should entrepreneurs do when they realise their product or service is failing?

Dr. Sudheer Babu

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Entrepreneurs shouldn’t hesitate to pivot if they sense their offerings won’t thrive. Credit: Gerd Altmann from Pixabay
Entrepreneurs shouldn’t hesitate to pivot if they sense their offerings won’t thrive. Credit: Gerd Altmann from Pixabay

Odeo launched with high hopes, offering a platform where users could discover and subscribe to podcasts of their interest. However, when iTunes entered the market, it dealt a blow to the founders’ expectations. iTunes quickly dominated the podcast space, leading Odeo’s founders to conclude that continuing their business would be akin to suicide. They gave their employees two weeks to come up with new ideas. After reviewing the proposals, they swiftly pivoted to a new business—creating a micro-blogging platform. This marked the birth of Twitter, which eventually took the world by storm.

So, what should entrepreneurs do when they realise their product or service is failing? Should they continue pushing forward with something that’s not working, risking significant failure? Or should they pivot wisely to something else? When Odeo’s founders recognized their failure, they changed the direction of their business. Instead of standing still and absorbing more damage, they pivoted and moved toward a new idea.

Pivoting refers to a strategic change in direction when a business’s current products or services are unlikely to succeed

Pivoting refers to a strategic change in direction when a business’s current products or services are unlikely to succeed. Entrepreneurs shouldn’t hesitate to pivot if they sense their offerings won’t thrive. This can help avoid further losses. Pivoting is not a retreat; it’s a smart business strategy. It involves identifying more viable ideas and shifting the company’s focus. However, pivoting also carries inherent risks that entrepreneurs must carefully weigh. Without a clear understanding and proper preparation, a pivot can lead to failure. Thorough research and planning are crucial before making a shift.

Consider Myntra, which was acquired by Flipkart. Initially, Myntra focused on personalized gift items, like customized t-shirts and mugs. However, the founders quickly realized this model wasn’t scalable for significant growth. They pivoted, moving into lifestyle products, and transformed Myntra into a massive success story.

Entrepreneurs shouldn’t view the shift from an unprofitable or stagnant business as a failure. Many global giants that are thriving today owe their success to pivoting. It’s unwise to cling to consistently loss-making products or services for extended periods. Identify new ideas and pivot quickly. The sooner the change is made, the better. Pivoting can prevent future financial shocks. Entrepreneurs shouldn’t worry about what others might think.

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New Report Highlights Pathways to Inclusive Economic Growth through AI

The WEF’s report offers key strategies for addressing equity concerns, tailoring AI solutions to local needs, and driving sustainable, long-term economic growth.

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Image credit: Tung Nguyen from Pixabay

The World Economic Forum (WEF) has released a comprehensive new report that explores how artificial intelligence (AI) can foster inclusive economic growth and societal progress. While AI has the potential to reshape economies and societies, the report underscores the significant challenge of ensuring that its benefits are shared equitably across the globe. The WEF’s report offers key strategies for addressing equity concerns, tailoring AI solutions to local needs, and driving sustainable, long-term economic growth.

Titled Blueprint for Intelligent Economies, the report was developed in collaboration with KPMG and provides a roadmap for governments, businesses, and other stakeholders to advance AI adoption at the national, regional, and global levels. Part of the Forum’s AI Competitiveness through Regional Collaboration Initiative, the report aims to tackle disparities in AI access, infrastructure, computing capabilities, and skills.

“We must recognize that while leveraging AI for economic growth and societal progress is a shared goal, countries and regions start from very different positions,” said Cathy Li, Head of AI, Data, and the Metaverse at the World Economic Forum. “This blueprint serves as a compass, guiding decision-makers toward impact-oriented collaboration and practical solutions that can unlock AI’s full potential.”

National and Regional Collaboration Key to Success

Central to the report’s findings is the emphasis on designing AI strategies that involve a wide range of stakeholders—including governments, businesses, entrepreneurs, civil society, and end-users. Such strategies must be locally driven, supported by high-level leadership, and developed in close consultation with communities to address pressing issues like governance, data privacy, and the impact of AI policies on innovation and investment.

“The significant potential of AI remains largely untapped in many regions worldwide. Establishing an inclusive and competitive AI ecosystem will become a crucial priority for all nations,” remarked Solly Malatsi, Minister of Communications and Digital Technologies of South Africa. “Collaboration among multiple stakeholders at the national, regional, and global levels will be essential in fostering growth and prosperity through AI for everyone.”

Tailored Frameworks for AI Development

The Blueprint for Intelligent Economies draws on global expertise to offer tailored frameworks for nations at different stages of AI development. The report highlights how successful solutions from other regions can be adapted to overcome local challenges. For instance, sharing AI infrastructure and energy resources across regions can alleviate national resource limitations, while centralized data banks can ensure local datasets reflect the diverse needs of communities. Public-private partnerships can also make AI-ready devices more affordable, allowing local innovators to scale their operations.

“All nations have a unique opportunity to advance their economic and societal progress through AI,” said Hatem Dowidar, CEO of E&. “This requires a collaborative approach with intentional leadership from governments, supported by active engagement from all stakeholders at all stages of the AI journey. Regional and global collaborations remain fundamental to addressing shared challenges and ensuring equitable access to key AI capabilities.”

Top Strategic Objectives for AI Development

The report outlines nine strategic objectives to guide AI strategies globally, focusing on three top priorities:

  1. Building Sustainable AI Infrastructure: Developing secure, scalable, and environmentally responsible AI systems is essential for unlocking growth. However, this requires significant investment and cross-sector collaboration.
  2. Curating Diverse and High-Quality Datasets: Data is critical to developing fair, accurate, and equitable AI models. Overcoming challenges like data accessibility, imbalance, and ownership is key to creating datasets that reflect the diversity of populations.
  3. Establishing Robust Ethical and Safety Guardrails: Ethical frameworks and safety standards are necessary to ensure that AI benefits society while minimizing risks. Preventing misuse and promoting responsible development will help build public trust in AI.

The report advocates for a multi-layered approach to advancing these objectives, starting with a focus on sustainable infrastructure and energy use, followed by embedding AI across sectors to drive innovation, and ending with a people-centered approach that prioritizes workforce empowerment and ethical governance.

Public-Private Partnerships Critical for Global AI Adoption

The WEF report also underscores the importance of collaboration between the public and private sectors to accelerate AI adoption. Governments, by implementing supportive policies and incentivizing continuous learning, can unlock AI’s potential as a growth engine and ensure that workers thrive in an AI-powered world.

In support of this vision, the AI Governance Alliance is launching Regional AI Activation Networks. These initiatives, set to roll out across the Middle East, Africa, and Southeast Asia throughout 2025, aim to deliver tailored programs that enhance AI capabilities, promote local data governance, and foster resilient AI value chains in regional ecosystems.

With this new report, the World Economic Forum continues to drive the conversation on how to harness AI for equitable growth, ensuring that no region or community is left behind as the world moves into an increasingly AI-powered future.

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