nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2015‒07‒11
five papers chosen by
Matthew Baker
City University of New York

  1. Is Industrialization Conducive to Long-Run Prosperity? By Franck, Raphaël; Galor, Oded
  2. Economic Implications of Historically Evolved Self-Efficacy: Agent-Based Modeling and Empirical Evidence from Rural Ghana By Wuepper, David; Drosten, Barbara
  3. A Model of Dynamic Conflict in Ethnocracies By Bakshi, Dripto; Dasgupta, Indraneel
  4. The Great Divergence: A Network Approach By Holger Strulik
  5. Economic Effects of the Abolition of Serfdom: Evidence from the Russian Empire By Markevich, Andrei; Zhuravskaya, Ekaterina

  1. By: Franck, Raphaël (Bar-Ilan University); Galor, Oded (Brown University)
    Abstract: This research explores the long-run effect of industrialization on the process of development. In contrast to conventional wisdom that views industrial development as a catalyst for economic growth, the study establishes that while the adoption of industrial technology was conducive to economic development in the short-run, it has had a detrimental effect on standards of living in the long-run. Exploiting exogenous source of regional variation in the adoption of steam engines during the French industrial revolution, the research establishes that regions in which industrialization was more intensive experienced an increase in literacy rates more swiftly and generated higher income per capita in the subsequent decades. Nevertheless, intensive industrialization has had an adverse effect on income per capita, employment and equality by the turn of the 21st century. This adverse effect reflects neither higher unionization and wage rates nor trade protection, but rather underinvestment in human capital and lower employment in skilled-intensive occupations. These findings suggest that the characteristics that permitted the onset of industrialization, rather than the adoption of industrial technology per se, have been the source of prosperity among the currently developed economies that experienced an early industrialization.
    Keywords: economic growth, industrialization, steam engine
    JEL: N33 N34 O14 O33
    Date: 2015–06
  2. By: Wuepper, David; Drosten, Barbara
    Abstract: We argue that self-efficacy is important for economic performance. Self-efficacy is at the psychological core of agency and entrepreneurship. It enables people to learn, and change and act to better their livelihood. In an agent-based model we show how different levels of individual self-efficacy can evolve as a reaction to environmental demands and rewards to human intervention. The basic idea is that people learn how to best survive in their specific environment and teach this knowledge to their children. Because this cultural heritage only adapts very slowly to the current environment, people might have self-efficacy levels that better fit to the context of their ancestors than to their own. With empirical data from Ghana, we defind that different-levels of self-efficacy have developed from different historic environmental conditions and directly influence today´s household incomes, controlling for observable incentives and constraints. Specifically, the historic returns on agricultural investments are found to have shaped the cultural evolution of self-efficacy. In contrast, current returns on investment explain far less variation in self-efficacy. We find that this cultural trait significantly affects income levels through shaping the farmers’ investment behavior. Regarding the measurement of self-efficacy, we find self-efficacy to be a process- rather than a goal-oriented belief and it is mainly culturally transmitted.
    Keywords: Self-Efficacy; Economic Performance; Economic Development, Economic History, Cultural Evolution; Smallholder Farming
    JEL: D22 N57 O12 O13 O21 Q12
    Date: 2015–06
  3. By: Bakshi, Dripto (Indian Statistical Institute); Dasgupta, Indraneel (Indian Statistical Institute)
    Abstract: We model an infinitely repeated Tullock contest, over the sharing of some given resource, between two ethnic groups. The resource is allocated by a composite state institution according to relative ethnic control; hence the ethnic groups contest the extent of institutional ethnic bias. The contest yields the per-period relative influence over institutions, which partly spills over into the next period, by affecting relative conflict efficiency. Our model generates non-monotone evolution of both conflict and distribution. Results suggest that external interventions, when effective in reducing current conflict and protecting weaker groups, may end up sowing the seeds of greater future conflict.
    Keywords: ethnocracy, ethnic conflict, dynamic contest, rent-seeking, inter-temporal productivity carryover
    JEL: D72 D74 O10 O20
    Date: 2015–06
  4. By: Holger Strulik (University of Goettingen)
    Abstract: We present a multi-country theory of economic growth in which countries are connected by a network of mutual knowledge exchange. Knowledge in any country depends on the human capital of the countries it exchanges knowledge with. The diffusion of knowledge throughout the world explains a period of increasing world inequality after the take-off of the forerunners of the industrial revolution, followed by decreasing relative inequality. Knowledge diffusion through a Small World network explains the 'New Kaldor facts' and produces an extraordinary diversity of country growth performances, including the overtaking of individual countries in the course of world development.
    Date: 2015
  5. By: Markevich, Andrei; Zhuravskaya, Ekaterina
    Abstract: We document a very large increase in agricultural productivity, peasants' living standards, and industrial development in the 19th century Imperial Russia as a result of the abolition of serfdom. We construct a novel province-level panel dataset of development outcomes and conduct a difference-in-differences analysis relying on cross-sectional variation in the shares of serfs and over-time variation in emancipation controlling for region-specific trends. We disentangle the effects of the emancipation and the subsequent land reform and show that land reform contributed negatively to agricultural productivity in contrast to a large positive effect of the emancipation. The evidence is consistent with the increase in the power of the peasant commune as the channel of the negative effect of the land reform. The different organizational forms of serfdom were associated with different levels of nutrition of serfs and productivity. The emancipation of serfs from estates where serfs were obliged to work on the landlord's farm (corvee, barshchina) caused an increase in height of their children by 1.6 centimeters. Estates where serfs were required to make in kind payment to the landlord (quitrent, obrok) were equally productive, but, in contrast, their emancipation did not lead to rise in their height. Commitment to an implicit longer-term contract on the amount of serf obligations to landlords, practiced in some estates, made serfdom more productive.
    Keywords: development; forced labor; Russian empire; serfdom
    Date: 2015–02

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