China’s economic rise is puzzling for many Nobel Prize winners.

Twenty-five years ago, economists faced a challenge. They were no longer focusing on big questions that mattered to people. As Noam Scheiber wrote in 2007, economists believed that progress came from answering small, specific questions. However, around the same time, Daron Acemoglu, James A. Robinson, and Simon Johnson were asking huge questions: Why do some countries succeed while others fail? Their answers, though not perfect, were bold. They believed that the institutions in a country—rules and systems that limit power and protect people’s rights—are what make the difference.

In their 2001 study, they explored why some countries that were wealthy in the 1500s are now poor, and why others have risen. They argued that institutions play a key role. Some institutions are designed to benefit a select few, often leading to exploitation. Others are inclusive and help societies grow. According to their theory, only the inclusive institutions truly drive long-term success.

One of their significant points was that colonialism had long-lasting negative effects, especially in Africa. But they also believed that countries could change their future, no matter their past. This was a positive message: the West didn’t have some special advantage that others couldn’t achieve with the right reforms.

While these ideas were debated at the time, they remain relevant today. However, China’s rise has challenged these views. Over the past two decades, China has grown rapidly, becoming wealthier in ways that don’t align with the institutionalists’ ideas. China’s model, which combines strict government control with a capitalist economy, has raised questions about the importance of inclusive institutions.

Even though Acemoglu and his colleagues argue that China’s growth was due to reforms that allowed some economic freedom, China’s current government’s clampdown on freedoms may eventually slow down growth. Still, China’s success shows that extractive institutions can sometimes produce results, even if they contradict the original theory.

In the end, what matters most is that Acemoglu, Johnson, and Robinson broadened the scope of economic research. Their work reminds us that no country is doomed to poverty. With the right changes, even a country like Mali can become prosperous.