Praise for pioneering knowledge of Africa's development

Harvard professor Nathan Nunn, creative economist, is the 2020 recipient of the Jan Söderberg Family Prize in Economics and Management. Professor Nunn will receive the Prize on SEK 1 million in Lund, Sweden, and give a lecture on his research on 24 March 2021.

Click here to watch the Prize ceremony and Prize lecture from 24 March 2021

Experimental economics and development economics are hot topics – from the Nobel laureates of 2019, to the recipient of the Jan Söderberg Family Prize in Economics and Management of 2020. This year’s laureate is economist and economic historian Nathan Nunn of Harvard University. He became a researcher to better understand the world around us. Why are societies and cultures different? Why are some more economically successful than others? What explains the dynamics of success and then decline that we observe historically across so many societies?

“My primary interests are in understanding how societies evolve over time and how historical processes are able to help us better understand the world today. This means trying to understand the evolution of economic systems, social systems, culture, and psychology and the interplay between each of these,” Nathan Nunn says.

In his research, Nunn examines the effects that historical events and factors have on subsequent societal outcomes. The quantitative analysis includes the use of historical data, often from archival sources, or anthropological fieldwork, which are then linked to later outcomes, measured in the shorter and longer-run.

“Professor Nunn’s findings and advanced quantitative methods have become well known and intensively debated during the past ten years. Innovative quantitative studies have grown into a significant sub-field and here professor Nunn has made a name for himself. His creative use of data from the past and present made him a perfect laurate for our prize, since it is awarded to work that has renewed the research field,” says Fredrik Andersson, dean at Lund University School of Economics and Management, as well as chair of the prize committee.

Three key findings by Nathan Nunn:

1. The levels of trust within Africa is still affected by the slave trades

Researchers Abhijit Banerjee, Esther Duflo and Michael Kremer were awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2019 for their experimental development economics. Nathan Nunn’s research moves in similar areas. He is for example cited by Duflo and Banerjee in their 2014 article Under the Thumb of History? Political Institutions and the Scope for Action, concerning how slave trade had a long-time negative effect on economic progress in certain African areas. Nunn comments:

“I think there is a lot we agree upon, as scholars working with economic development. In the article, they raise the question of whether understanding the historical roots of economic development means that policy cannot be effective today. I don’t think the answer to this is yes. In fact, I think understanding how a country got to where it is today is important for helping the country move forward in a positive direction tomorrow. Understanding the historical and evolutionary dynamics of a society is crucial for this.”

In his research on the effects of the Slave trade, Nathan Nunn showed that across the Americas, the more dependent on slavery a nation was in 1750, the poorer it was in 2000. He found the same relationship inside the US. In 2000, states with more slaves in 1860 were poorer than states with fewer slaves and much poorer than the free Northern states.

Some of Nathan Nunn’s most cited studies argue that a substantial part of Africa's current underdevelopment appears to be caused by the long-term effects of the Atlantic and Arab slave trades. He has published findings on how current differences in trust levels within Africa can be attributed to the impact of the Atlantic and Arab slave trades, which have caused the emergence of low-trust cultural norms, beliefs, and values in ethnic groups heavily affected by slavery.

“I want to understand the vast differences in economic development that we observe across the globe. Why is the African continent, by far, the poorest region of the world today? Can Africa’s history and some of the events in its past, like the slave trades, explain its current level of economic development? Understanding the root causes of comparative development will help us understand the best policies to employ moving forward,” professor Nunn says.

2. Labour mobility more useful than foreign aid

Nathan Nunn is a proponent of rethinking economic development, arguing that rich countries could do things differently to help developing countries. Instead of investing in development, for instance, they could just stop doing things that harm poor countries.

“Many of the harmful things The West is doing to developing countries fly under the radar within development economics for a variety of reasons. One is that some of them, like anti-dumping duties, are not particularly glamorous. Another is that many of the harmful things being done are viewed as being outside of development economics and within the world of politics or political economy. For example, migrant restrictions are often viewed as a political issue more than a development one,” he says and continues:

“In fact, the evidence is pretty clear that labour mobility tends to help all involved. Those who move are better off, so are their families, so is the receiving country, and surprisingly the evidence even suggests that so is the sending country. The rationale for not loosening restrictions against free movement of labour does not seem to be economic in nature. It is strange that as economists, we would strongly promote free markets and freedom of choice, but not expect this in labour markets.”

3. Improving institutional contracts is crucial

Nathan Nunn’s work also deals with how countries' ability to enforce contracts is a more important determinant of their comparative advantage than skilled labour and physical capital combined.

“A key part of comparative advantage – and what goods countries produce, which we know is intimately linked to income – is the quality of a country’s legal institutions; namely, its contracting institutions. For policy makers, knowing how to improve the quality of a country’s institutions is a tough feat. Institutions are determined through historical and evolutionary processes and they are remarkably resilient. Comparative advantage appears to be driven, by deeply rooted historically determined factors. This makes improving institutions a much tougher task than accumulating human or physical capital.”

More reading

• The Long-term Effects of Africa's Slave Trades
• The Slave Trade and the Origins of Mistrust in Africa
• Slavery, Inequality, and Economic Development in the Americas: An Examination of the Engerman-Sokoloff Hypothesis
• Under the Thumb of History? Political Institutions and the Scope for Action
• Rethinking Economic Development
• Relationship-Specificity, Incomplete Contracts and the Pattern of Trade