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Welcome, everyone. Today, we gather for an imaginary conversation to explore the fundamental role institutions play in shaping our world—how they influence economic prosperity, political power, societal development, and global interactions.
Together, with my esteemed colleagues Daron Acemoglu, Simon Johnson, and other distinguished thinkers, we’ll unpack how inclusive systems can drive sustainable progress, how historical decisions echo into the present, and how we can chart a path toward a fairer, more prosperous global future.
Let’s dive in and uncover the key lessons from our collective research and experience.

Inclusive vs. Extractive Institutions

Participants: Daron Acemoglu, Simon Johnson, James A. Robinson, Hernando de Soto, Elinor Ostrom
Moderator: Joseph Stiglitz
Joseph Stiglitz (Moderator):
Welcome, everyone. Today, we’re discussing the foundations of prosperity, specifically the critical differences between inclusive and extractive institutions. Daron, let’s start with you. Why are inclusive institutions so crucial for economic success?
Daron Acemoglu:
Thank you, Joseph. Inclusive institutions are essential because they create opportunities for a broad segment of the population. They secure property rights, provide incentives for innovation, and allow individuals to make economic decisions without fear of expropriation. When institutions are inclusive, they encourage creativity, investment, and the free flow of ideas, all of which are vital for long-term growth.
Joseph Stiglitz (Moderator):
Simon, how does this connect to your work on institutional evolution?
Simon Johnson:
Building on what Daron said, institutions evolve over time through what we call "critical junctures." These are pivotal moments—such as wars, revolutions, or colonial transitions—when societies can change course. If leaders and citizens make choices that lean toward inclusivity, these decisions set a positive path dependency. However, extractive institutions often arise when elites consolidate power and wealth, stifling development.
Joseph Stiglitz (Moderator):
James, can you elaborate on the role of political systems in shaping these paths?
James A. Robinson:
Of course. Political systems determine who holds power and how it’s distributed. Inclusive political systems—where power is shared and checked—tend to produce inclusive economic institutions. However, extractive political systems allow elites to dominate, which typically leads to extractive economic structures. A society’s success often depends on its ability to resist the entrenchment of these elites.
Joseph Stiglitz (Moderator):
Hernando, your work has emphasized the importance of property rights. How does this fit into the discussion?
Hernando de Soto:
Property rights are a cornerstone of inclusive institutions. Without them, individuals can’t accumulate capital, secure investments, or build wealth. In many developing nations, informal economies dominate because people lack legal recognition of their assets. By integrating these assets into the formal economy, we unlock immense potential for growth and prosperity.
Joseph Stiglitz (Moderator):
Elinor, your research on common-pool resources seems to complement this. How do inclusive institutions help manage shared resources effectively?
Elinor Ostrom:
Absolutely, Joseph. Inclusive institutions empower communities to govern their resources collectively. My research shows that local management often outperforms centralized or extractive systems. When communities have a say in how resources are allocated and used, they develop trust, accountability, and long-term strategies for sustainability.
Joseph Stiglitz (Moderator):
This brings us to the concept of persistence. Daron, why do extractive institutions persist even when they harm a society’s economy?
Daron Acemoglu:
Extractive institutions persist because they benefit a small, powerful elite. These elites resist changes that could redistribute power or wealth, even if it means sacrificing economic growth for the broader population. Overcoming this requires a combination of grassroots movements, leadership, and sometimes external pressures to dismantle entrenched systems.
Joseph Stiglitz (Moderator):
Simon, does globalization play a role in either promoting or undermining inclusivity?
Simon Johnson:
It does, but it’s a double-edged sword. Globalization can spread ideas and technologies that promote inclusivity. However, it can also empower extractive elites by increasing their access to resources and markets without improving local governance. The key is ensuring that globalization is accompanied by institutional reforms.
Joseph Stiglitz (Moderator):
James, do you see any modern examples where inclusivity is expanding?
James A. Robinson:
Yes, there are positive examples. Countries like Botswana have made deliberate efforts to build inclusive institutions by decentralizing power and reinvesting resource wealth. While challenges remain, these efforts show that change is possible, even in regions with a history of extractive practices.
Joseph Stiglitz (Moderator):
Hernando and Elinor, any final thoughts on building inclusive institutions?
Hernando de Soto:
We must focus on formalizing informal economies. This doesn’t mean imposing top-down rules but rather recognizing and legitimizing the systems that already work for local communities.
Elinor Ostrom:
I agree. Inclusivity requires participation at all levels—local, national, and global. Empowering communities and fostering collaboration are the most effective tools we have for building sustainable institutions.
Joseph Stiglitz (Moderator):
Thank you all for this fascinating discussion. It’s clear that inclusive institutions are not just a theoretical concept—they are a practical necessity for prosperity. Let’s continue working toward a more inclusive world.
The Role of Political and Economic Power

Participants:
Daron Acemoglu, Simon Johnson, James A. Robinson, Francis Fukuyama, Esther Duflo
Moderator:
Madeleine Albright
Madeleine Albright (Moderator):
Welcome, everyone. Today’s discussion focuses on the interplay between political and economic power and how it shapes societies. Daron, let’s start with you. How does the concentration of political power impact economic institutions?
Daron Acemoglu:
Thank you, Madeleine. The concentration of political power is a key factor in the creation of extractive institutions. When elites monopolize power, they design economic systems to benefit themselves at the expense of the broader population. This leads to inequality, inefficiency, and often stagnation. Inclusive political systems, by contrast, create checks and balances that distribute power and wealth more equitably.
Madeleine Albright (Moderator):
Francis, your work often explores political order. How do you see the relationship between political stability and economic progress?
Francis Fukuyama:
Political stability is essential, but it depends on the nature of the regime. Stability in extractive systems can prolong repression and economic stagnation. True progress comes when political systems balance stability with inclusivity. Institutions must adapt to ensure power doesn’t concentrate excessively, which can lead to resistance and eventual collapse, as history has shown.
Madeleine Albright (Moderator):
Simon, what role do historical events play in reshaping these dynamics?
Simon Johnson:
Historical events, or what we call "critical junctures," often reset the political and economic order. For example, revolutions, wars, or decolonization create opportunities for power to shift. Whether this leads to inclusivity or further concentration of power depends on the choices made during these moments. Unfortunately, elites often exploit these opportunities to reinforce their control.
Madeleine Albright (Moderator):
James, do elites always act against societal progress, or can they play a constructive role?
James A. Robinson:
Good question. While elites often resist changes that threaten their power, there are instances where enlightened leadership can promote inclusivity. For example, in 19th-century Britain, industrial elites supported reforms like the extension of voting rights because they saw the long-term economic benefits of a more engaged and empowered population.
Madeleine Albright (Moderator):
Esther, you’ve worked extensively on poverty alleviation. How do political power dynamics affect efforts to address inequality?
Esther Duflo:
Political power directly shapes how resources are allocated. In many cases, governments in extractive systems divert resources away from education, healthcare, and infrastructure, exacerbating inequality. Empowering marginalized communities and creating accountability mechanisms are crucial to breaking this cycle and ensuring that public policies serve everyone, not just the elite.
Madeleine Albright (Moderator):
Daron, you’ve written about "creative destruction." Can you explain how it ties into this discussion?
Daron Acemoglu:
Certainly. "Creative destruction" refers to the process by which innovation disrupts existing economic structures. While this is essential for progress, it often threatens elites who rely on the status quo. They may resist these changes, even if it means hindering economic growth. For example, monopolies often block innovation to protect their dominance.
Madeleine Albright (Moderator):
Francis, do you see parallels between historical resistance to innovation and today’s challenges with technological advancements?
Francis Fukuyama:
Absolutely. In the digital age, we see new forms of concentrated power, such as tech monopolies and authoritarian governments using technology to control information. These developments mirror historical patterns where elites resist changes that might democratize power or challenge their dominance. Regulation and institutional innovation are needed to ensure technology benefits society broadly.
Madeleine Albright (Moderator):
Simon, can external forces, such as globalization or international aid, help counteract the negative effects of concentrated power?
Simon Johnson:
They can, but they often fall short. Globalization, for instance, can empower local elites by giving them access to new markets without improving governance. Similarly, aid can entrench extractive systems if it’s not tied to institutional reforms. The focus must be on creating accountability and fostering local empowerment.
Madeleine Albright (Moderator):
James, are there modern examples where political and economic power have shifted toward inclusivity?
James A. Robinson:
Yes, Botswana is a good example. After gaining independence, its leaders made deliberate choices to build inclusive political and economic systems, reinvesting resource wealth into education and infrastructure. While challenges remain, it’s a powerful reminder that inclusivity is possible with the right leadership.
Madeleine Albright (Moderator):
Esther, what role does grassroots activism play in challenging power imbalances?
Esther Duflo:
Grassroots movements are essential. They give marginalized communities a voice and can pressure governments to adopt more inclusive policies. For example, community-driven programs in India have significantly improved access to education and healthcare. These efforts often succeed where top-down approaches fail because they are directly connected to local needs.
Madeleine Albright (Moderator):
Thank you all for this insightful discussion. It’s clear that the balance of political and economic power is critical to building fair and prosperous societies. Let’s continue working toward systems that empower and benefit everyone.
Path Dependency and Long-Term Institutional Effects

Participants:
Daron Acemoglu, Simon Johnson, James A. Robinson, Niall Ferguson, Douglass North
Moderator:
Yuval Noah Harari
Yuval Noah Harari (Moderator):
Welcome, everyone. Our topic today is the persistence of institutions and the long-term effects of path dependency. Let’s start with Daron. Why do some institutions remain extractive for so long, even when they hinder economic progress?
Daron Acemoglu:
Thank you, Yuval. Institutions persist because they benefit a powerful elite. These elites resist changes that could threaten their control, even if it means suppressing innovation or economic growth. The phenomenon of path dependency ensures that once an extractive system is established, it becomes increasingly difficult to dismantle without significant disruption.
Yuval Noah Harari (Moderator):
Douglass, your work focuses on institutional drift. How does this concept explain the persistence of these systems?
Douglass North:
Institutional drift refers to the small, incremental changes in institutions over time. These changes often seem insignificant in the short term but can accumulate and lock societies into particular trajectories. When these drifts favor elites or reinforce existing power structures, they create a self-reinforcing cycle that’s hard to break.
Yuval Noah Harari (Moderator):
Simon, how do historical events, or critical junctures, provide opportunities to break away from these entrenched paths?
Simon Johnson:
Critical junctures—wars, revolutions, or major crises—disrupt the status quo and open up possibilities for institutional change. However, the direction of change depends on who seizes the moment. If inclusive forces gain momentum, these events can lead to a more equitable trajectory. But if elites capitalize on the instability, they often entrench their control further.
Yuval Noah Harari (Moderator):
Niall, from your historical perspective, can you provide an example of how path dependency has shaped a nation’s development?
Niall Ferguson:
Certainly. Take the British Empire, for example. The institutions established during its colonial expansion—such as common law and property rights—had long-lasting effects on former colonies. Some countries, like the United States, adapted these institutions inclusively, leading to growth. Others, like many African colonies, inherited extractive systems that persisted and hindered development.
Yuval Noah Harari (Moderator):
James, your research highlights the persistence of extractive institutions. Can you share a modern example?
James A. Robinson:
Sure. Venezuela is a striking example. The country’s reliance on oil revenues has perpetuated extractive political and economic systems. Power is concentrated in a small elite, and the wealth generated from oil has been used to maintain their dominance rather than invest in broader economic or institutional development.
Yuval Noah Harari (Moderator):
Daron, what role does public resistance play in breaking free from path dependency?
Daron Acemoglu:
Public resistance is crucial. When citizens organize and demand change, they can pressure elites to reform institutions. For example, during the civil rights movement in the United States, grassroots activism challenged entrenched systems of racial inequality, leading to significant institutional changes. However, resistance is often met with pushback from those who benefit from the status quo.
Yuval Noah Harari (Moderator):
Douglass, how do external forces, such as globalization or foreign aid, influence path dependency?
Douglass North:
External forces can reinforce or weaken path dependency. Globalization, for instance, can introduce new ideas and technologies that challenge existing systems. However, if foreign aid is directed toward corrupt regimes, it can entrench extractive institutions. The key is aligning external interventions with internal reform efforts to encourage inclusivity.
Yuval Noah Harari (Moderator):
Niall, do you see technological advancements as a way to disrupt entrenched systems, or do they risk reinforcing them?
Niall Ferguson:
It depends. Technology can democratize access to information and empower marginalized groups, as we’ve seen with social media movements. But it can also be co-opted by elites, as authoritarian regimes use surveillance technology to tighten their grip on power. The outcome depends on how technology is implemented and regulated.
Yuval Noah Harari (Moderator):
Simon, are there historical lessons that can guide modern efforts to escape extractive systems?
Simon Johnson:
One lesson is the importance of coalition-building. Successful transitions often occur when diverse groups unite to demand reform. For example, during the Glorious Revolution in England, alliances between the monarchy, parliament, and the merchant class led to institutional changes that laid the groundwork for inclusive economic growth.
Yuval Noah Harari (Moderator):
James, as we wrap up, do you see hope for countries currently stuck in extractive systems?
James A. Robinson:
Yes, there’s always hope. History shows us that change is possible, even in the most entrenched systems. It requires leadership, collective action, and sometimes external support. The key is to identify critical moments and seize opportunities to push for reform.
Yuval Noah Harari (Moderator):
Thank you, everyone, for this enlightening discussion. Understanding path dependency and institutional persistence is vital for addressing the challenges facing many nations today. Let’s continue exploring ways to break free and build a more inclusive future.
Human Capital, Democracy, and the Role of Society

Participants:
Daron Acemoglu, Simon Johnson, James A. Robinson, Amartya Sen, Michelle Bachelet
Moderator:
Ban Ki-moon
Ban Ki-moon (Moderator):
Good day, everyone. Today, we’re diving into how human capital, democracy, and societal involvement shape economic and political outcomes. Let’s begin with Amartya. How does human capital relate to economic development and democracy?
Amartya Sen:
Thank you, Ban. Human capital—education, health, and skills—is fundamental to both economic and democratic development. A well-educated and healthy population is better equipped to make informed decisions, demand accountability, and participate actively in democratic processes. Without investment in human capital, societies struggle to sustain long-term growth and inclusivity.
Ban Ki-moon (Moderator):
Daron, building on that, what role do inclusive institutions play in fostering human capital?
Daron Acemoglu:
Inclusive institutions are crucial. They ensure access to education, healthcare, and opportunities for everyone, not just the elite. These investments empower individuals to contribute productively to the economy and engage politically. When institutions are extractive, resources are diverted away from public goods, and human capital development suffers.
Ban Ki-moon (Moderator):
Michelle, as someone with experience in governance and human rights, how do governments prioritize these investments?
Michelle Bachelet:
Governments play a central role in creating equitable access to education and healthcare. However, prioritization often depends on political will and pressure from civil society. When citizens are active and demand accountability, governments are more likely to allocate resources effectively. Conversely, in systems where power is concentrated, these investments often take a backseat to the interests of the elite.
Ban Ki-moon (Moderator):
Simon, how does societal participation influence the success of democratic systems?
Simon Johnson:
Societal participation is essential. When citizens are engaged, they can hold leaders accountable and prevent the concentration of power. This creates a feedback loop: strong democracies foster societal involvement, and active societies strengthen democracies. However, participation must be inclusive; otherwise, marginalized groups remain excluded from the benefits of democracy.
Ban Ki-moon (Moderator):
James, what about the risks of populism and polarization in democratic systems? How do they impact human capital?
James A. Robinson:
Populism and polarization undermine democracy by eroding trust in institutions and creating divisions. This often leads to policies that prioritize short-term political gains over long-term investments in education and healthcare. Inclusive democracies, where power is distributed and balanced, are better equipped to resist these tendencies and maintain a focus on human capital development.
Ban Ki-moon (Moderator):
Amartya, you’ve spoken about the importance of freedom in development. Can you elaborate on how freedom and education intersect?
Amartya Sen:
Freedom is both a means and an end of development. Education enhances individual freedoms by expanding choices and opportunities. At the same time, freedom—such as the ability to speak out, organize, and vote—ensures that education and other public goods are prioritized. The two reinforce each other, creating a virtuous cycle of growth and empowerment.
Ban Ki-moon (Moderator):
Michelle, what role does gender equality play in this conversation?
Michelle Bachelet:
Gender equality is a cornerstone of human capital development. When women have equal access to education, healthcare, and economic opportunities, societies benefit enormously. It’s not just a moral imperative but an economic one—empowering women leads to more inclusive growth and stronger democracies.
Ban Ki-moon (Moderator):
Daron, are there any specific policies you see as critical for strengthening human capital in developing nations?
Daron Acemoglu:
Absolutely. Policies that ensure universal access to education and healthcare are foundational. Additionally, programs that provide conditional cash transfers—where benefits are tied to school attendance or health check-ups—have shown great success in improving outcomes in developing nations. However, these policies must be paired with institutional reforms to ensure accountability and sustainability.
Ban Ki-moon (Moderator):
Simon, how does globalization impact human capital and democracy?
Simon Johnson:
Globalization is a double-edged sword. On the one hand, it spreads ideas, technologies, and resources that can enhance human capital. On the other hand, it can exacerbate inequality if benefits are not distributed equitably. The challenge is ensuring that globalization strengthens, rather than undermines, democratic institutions and public investment.
Ban Ki-moon (Moderator):
James, are there examples of countries that have successfully balanced these dynamics?
James A. Robinson:
Yes, countries like South Korea have invested heavily in education and technology while maintaining democratic accountability. They’ve shown how strong institutions can harness globalization to improve human capital and foster equitable growth. However, this balance is fragile and requires constant vigilance.
Ban Ki-moon (Moderator):
Amartya, as we close, what would you say is the most important takeaway for policymakers?
Amartya Sen:
The most important lesson is that development is about people, not just GDP. Investing in human capital—education, health, and freedoms—lays the foundation for sustainable growth and vibrant democracies. Policymakers must prioritize these investments to ensure that everyone can contribute to and benefit from progress.
Ban Ki-moon (Moderator):
Thank you, everyone, for this rich discussion. It’s clear that human capital, democracy, and societal participation are deeply interconnected. Let’s work together to create a world where every individual can thrive.
Economic Development and Global Interactions

Participants:
Daron Acemoglu, Simon Johnson, James A. Robinson, Jeffrey Sachs, Ngozi Okonjo-Iweala
Moderator:
Kristalina Georgieva
Kristalina Georgieva (Moderator):
Good day, everyone. Today, we’ll discuss the relationship between economic development and global interactions, focusing on how globalization, foreign aid, and international institutions influence development. Daron, let’s start with you. How do institutions mediate the effects of globalization on economic development?
Daron Acemoglu:
Thank you, Kristalina. Institutions play a critical role in determining whether globalization benefits or harms a country. Inclusive institutions allow nations to harness globalization by promoting trade, innovation, and technology adoption. In contrast, extractive institutions can exacerbate inequality and corruption, as the benefits of globalization are captured by elites rather than being broadly shared.
Kristalina Georgieva (Moderator):
Ngozi, as someone deeply involved in global trade, how do you see the role of international organizations like the WTO in shaping these dynamics?
Ngozi Okonjo-Iweala:
International organizations are vital for creating a fair and rules-based global system. They provide smaller and developing nations with a platform to negotiate and protect their interests. However, these institutions must ensure inclusivity and address imbalances, such as unfair trade practices, that can deepen inequalities. Supporting capacity building in developing nations is key.
Kristalina Georgieva (Moderator):
Jeffrey, your work often focuses on sustainable development. How can globalization align with sustainability goals?
Jeffrey Sachs:
Globalization, if managed correctly, can be a powerful tool for sustainability. For instance, global trade can promote the dissemination of green technologies and renewable energy systems. However, current systems often prioritize short-term profits over environmental and social considerations. We need stronger international agreements to ensure that economic growth aligns with the UN’s Sustainable Development Goals (SDGs).
Kristalina Georgieva (Moderator):
Simon, does foreign aid play a positive role in fostering development, or does it risk entrenching extractive systems?
Simon Johnson:
It can go either way. Foreign aid has the potential to support infrastructure, education, and healthcare, which are critical for development. However, in countries with extractive institutions, aid can unintentionally reinforce corruption and elite power. The key is to tie aid to institutional reforms and ensure transparency in how funds are used.
Kristalina Georgieva (Moderator):
James, what about the role of grassroots movements in leveraging globalization for local development?
James A. Robinson:
Grassroots movements are essential. They provide communities with a voice in global and national discussions, ensuring that development aligns with local needs. For example, movements advocating for fair trade have successfully pressured companies and governments to adopt practices that benefit small producers. These efforts show that globalization doesn’t have to be top-down.
Kristalina Georgieva (Moderator):
Daron, how can technology, as a key driver of globalization, impact inequality within and between nations?
Daron Acemoglu:
Technology has a dual effect. On one hand, it can democratize access to information and resources, empowering individuals and small businesses. On the other hand, it can concentrate wealth and power in the hands of a few, particularly in nations with weak institutions. Inclusive policies are essential to ensure that technological progress benefits everyone.
Kristalina Georgieva (Moderator):
Ngozi, what policies can help developing nations integrate more effectively into the global economy?
Ngozi Okonjo-Iweala:
Developing nations need to focus on building infrastructure, improving education, and enhancing governance to attract investment and compete globally. Trade policies must prioritize diversification, moving away from over-reliance on a single export. International support in these areas, including fair trade agreements and capacity-building initiatives, can make a significant difference.
Kristalina Georgieva (Moderator):
Jeffrey, do you see examples where globalization has successfully fostered inclusive development?
Jeffrey Sachs:
Yes, East Asian nations like South Korea and Taiwan are excellent examples. They used globalization strategically, investing heavily in education and technology while protecting key industries during early stages of development. Their success demonstrates the importance of combining open trade with strong domestic policies.
Kristalina Georgieva (Moderator):
Simon, as we wrap up, what lessons can we learn from history about balancing global interactions with domestic priorities?
Simon Johnson:
History teaches us that balance is critical. Over-reliance on globalization without building domestic institutions leads to vulnerability. For example, during the colonial era, many nations became dependent on raw material exports, which hindered long-term development. Strong institutions, local capacity building, and strategic policy-making are essential for ensuring that globalization benefits the broader population.
Kristalina Georgieva (Moderator):
James, any closing thoughts on how nations can move toward inclusive and sustainable development?
James A. Robinson:
Nations must focus on building inclusive institutions that empower citizens and distribute resources equitably. International interactions—whether trade, aid, or technological exchange—should reinforce these efforts rather than undermine them. The future depends on creating systems that prioritize long-term progress over short-term gains.
Kristalina Georgieva (Moderator):
Thank you all for this enlightening discussion. The intersection of globalization and development is complex, but it’s clear that with the right policies and institutions, we can create a more inclusive and sustainable world.
Short Bios:
Daron Acemoglu: Nobel laureate and economist renowned for his research on the role of institutions in economic development and inequality. Co-author of Why Nations Fail.
Simon Johnson: Economist specializing in institutional evolution, economic history, and the impact of globalization on inequality. Former Chief Economist of the IMF.
James A. Robinson: Political scientist and co-author of Why Nations Fail, known for his work on the interplay between political and economic systems.
Francis Fukuyama: Political economist and author of The Origins of Political Order, focusing on the development of political institutions and governance.
Elinor Ostrom: Nobel laureate in economics, celebrated for her groundbreaking work on the governance of common-pool resources and community-driven solutions.
Douglass North: Economic historian and Nobel laureate, recognized for his theories on institutional drift and the long-term impact of historical processes.
Jeffrey Sachs: Economist and advocate for sustainable development, known for his leadership on the UN Sustainable Development Goals and global poverty reduction.
Ngozi Okonjo-Iweala: Director-General of the World Trade Organization, focusing on global trade equity, economic growth, and capacity building in developing nations.
Amartya Sen: Nobel laureate whose work emphasizes human development, freedoms, and the critical role of education and healthcare in fostering equity and growth.
Michelle Bachelet: Former President of Chile and UN High Commissioner for Human Rights, advocating for education, healthcare, and gender equality as pillars of development.
Niall Ferguson: Historian and author specializing in economic and institutional history, examining how historical trends shape modern development.
Esther Duflo: Nobel laureate and economist, pioneering innovative strategies to combat global poverty through field experiments and policy design.
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