center for economy and society

billionaires and institutions

The Acemoglu-Robinson hypothesis comes from Daron Acemoglu and James Robinson's work on institutions and economic development. The core argument: inclusive political institutions (democracy, rule of law, property rights) combined with inclusive economic institutions (free markets, competition) lead to sustained economic growth and wealth creation.

The hypothesis predicts that billionaires should thrive in democratic, free-market economies. Places where property rights are secure, contracts are enforced, and creative destruction is allowed.

China is a leading counterexample. It has produced more billionaires than almost any other country despite lacking the inclusive political institutions the theory says are necessary. The state controls key sectors, property rights are less secure, and the political system is authoritarian. Yet billionaires emerge anyway.

My research examined why. What conditions in China allow billionaire wealth creation outside the Acemoglu-Robinson framework?