This year’s Nobel Prize in Economic Sciences was awarded to Daron Acemoglu, Simon Johnson and James Robinson [AJR] for their work in understanding how good institutions play are essential role for a country’s prosperity. They explain how 'inclusive institutions' can help countries grow and create long-term benefits for everyone. They also explain how 'extractive institutions' provide short-term gains for the people in power.   In a press release announcing the winners of this year's Nobel Prize for Economic Science, the The Royal Swedish Academy of Sciences noted that societies changed when Europeans colonised large parts of the globe. "This was sometimes dramatic, but did not occur in the same way everywhere. In some places, the aim was to exploit the indigenous population and extract resources for the colonisers’ benefit. In others, the colonisers formed inclusive political and economic systems for the long-term benefit of European migrants," the press release says.  AJR's hypothesis explains the role of institutions in wealth creation why some former colonies are poor. However, their work has come under sharp criticism from several quarters for ignoring the effects colonisation had on the colonised countries and how many of these countries still reel under the effects of colonisation. Guest: Dr. Surbhi Kesar, a senior lecturer at the Department of Economics at School of Oriental and African Studies, University of London. Host: Nivedita. V Edited by Jude Weston