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The Nobel Prize in Economics goes to prosperity researchers

Darren Acemoglu, Simon Johnson and James A. Robinson received this year’s Nobel Prize in Economic Sciences for their contributions to proving the importance of public institutions to a country’s prosperity.

KEY FACTS

  • The prestigious prize, officially known as the Sveriges Riksbank Prize for Economic Sciences in Memory of Alfred Nobel, is the last prize awarded this year and is worth SEK 11 million ($1.1 million).
  • This year’s laureates showed that one of the explanations for differences in countries’ prosperity is the social institutions introduced during European colonization. Inclusive institutions were often introduced in countries that were poor at the time of colonization, which over time led to general prosperity for the population. This is an important reason why former colonies that were once rich are now poor and vice versa.
  • Introducing inclusive institutions would create long-term benefits for everyone, but extractive institutions provide short-term gains for those in power. As long as the political system ensures they retain their control, no one will trust their promises of future economic reforms. According to the laureates, this is the reason why there is no improvement.
  • “Reducing the huge income gaps between countries is one of the greatest challenges of our time. The laureates have demonstrated the importance of public institutions in achieving this,” said Jakob Svensson, Chairman of the Economic Sciences Prize Committee.
  • “Societies with poor rule of law and institutions that exploit the population do not generate growth or change for the better,” the prize’s organizers add on their website.

TANGENT

Darren Acemoglu and Simon Johnson work at MIT, while James Robinson is at the University of Chicago.

Acemoglu and Johnson recently collaborated on a book researching technology through the ages that demonstrates how some technological advances are better at creating jobs and spreading wealth than others.

KEY STORY

The Economics Prize is not one of the original science, literature and peace prizes created by the will of dynamite inventor and businessman Alfred Nobel and first awarded in 1901, but is a later additional prize established and funded by the Central Bank of Sweden in 1968.

Past recipients of the award include a number of influential thinkers such as Milton Friedman, and John Nash – played by actor Russell Crowe in the 2001 film A Beautiful Mind, and former US Federal Reserve Chairman Ben Bernanke.

Last year, Harvard economic historian Claudia Goldin won a prize for her work highlighting the causes of pay and labor market inequality between men and women.

Meta Q1 Earnings Preview: AI Investments And Strategic Shifts

Earnings Outlook And Corporate Overhaul

Meta Platforms is scheduled to report first-quarter earnings on Wednesday after market close. Analysts expect earnings per share of $6.79 and revenue of approximately $55.45 billion. Estimates imply year-on-year revenue growth of around 31%, supported primarily by advertising activity.

Investment In AI Growth And Innovation

At the same time, the company is increasing investment in artificial intelligence. Mark Zuckerberg has led efforts to expand AI capabilities, including a $14.3 billion investment in Scale AI. Leadership changes also include Alexandr Wang’s involvement in Meta’s AI initiatives. Development work is being carried out through Meta Superintelligence Labs, with a focus on advancing AI models.

Advertising Revenues And Cost-Cutting Strategies

Advertising continues to account for the majority of revenue. Growth in this segment supports overall financial performance despite higher investment levels. In parallel, Meta has implemented workforce reductions, including a cut of around 10% of employees, or approximately 8,000 roles, along with a hiring freeze affecting about 6,000 positions. These measures follow earlier reductions in divisions such as Reality Labs, as well as in global operations and sales.

Capital Expenditures And Future Strategic Direction

Investment in infrastructure remains a central part of the strategy. Capital expenditure for the first quarter is estimated at $27.63 billion, with full-year projections ranging from $115 billion to $135 billion. These investments are directed toward expanding data center capacity to support AI development, placing Meta alongside companies such as Alphabet, Amazon, and Microsoft.

As Meta continues to refine its monetization strategy and lay the groundwork for long-term innovation, investors will be keenly watching how its AI investments and disciplined cost management translate into sustainable revenue growth and a competitive advantage.

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