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on Economic Growth |
| By: | Roger Fouquet; Stephen Broadberry |
| Abstract: | This paper investigates very long run pre-industrial economic development. New annual GDP per capita data for six European countries over the last seven hundred years paint a clearer picture of the history of European economic development. First, the paper confirms that sustained growth has been a recent phenomenon, but rejects the argument that there was no long run growth in living standards before the Industrial Revolution. Instead, the evidence demonstrates the existence of numerous periods of economic growth before the nineteenth century - unsustained, but raising GDP per capita. It also shows that many of these economies experienced substantial economic decline. Thus, rather than being stagnant, pre-nineteenth century European economies experienced a great deal of change. Finally, it offers some evidence that, from the nineteenth century, these economies increased the likelihood of being in a phase of economic growth and reduced the risk of being in a phase of economic decline. |
| Keywords: | history of economic development; economic growth; economic decline |
| JEL: | E01 N13 O11 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:63626&r=gro |
| By: | Gene M. Grossman; Elhanan Helpman; Ezra Oberfield; Thomas Sampson |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:qsh:wpaper:346746&r=gro |
| By: | Latchezar Popov (The University of Virginia); Toshihiko Mukoyama (University of Virginia) |
| Abstract: | We analyze the evolution of economic institution during the process of industrialization. In particular, we focus on the institution of contract enforcement. Empirically, we show that, during the process of industrialization, countries tend to shift their manufacturing production towards industries that require more relationship-specific investment. Theoretically, we build a dynamic model with incomplete contracts and evolving institutions to account for this pattern. In our model, the incompleteness of contract leads to two types of misallocations that leads to production inefficiency: unbalanced use of inputs and unbalanced production of different goods. In addition to this production inefficiency, the imperfect contract enforcement leads to distortions in factor supply. The government invests in enforcement institutions in order to improve the contractual environment, and the evolution of industry composition crucially depends on how contractual environment changes over time. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed015:1275&r=gro |
| By: | James J. Feigenbaum; Lee, James; Filippo Mezzanotti |
| Abstract: | What was the economic impact of General William Sherman?s 1864-65 military march through Georgia, South Carolina, and North Carolina? How does local economic activity respond in both the short- and long-run to capital and infrastructure destruction? We match an 1865 US War Department map of Sherman?s march to detailed county level demographic, agricultural, and manufacturing data from US Censuses, 1850-1930. We show that both agricultural and manufacturing output fell relatively more from 1860 to 1870 and 1880 in Sherman counties compared to non-Sherman counties in the same state. These relative declines do not appear to be driven by differential out-migration, demographic patterns, or long-lasting infrastructure destruction. Instead, by collecting new historical data on local banks, we show that damage to credit markets was more severe in march counties and that these financial disruptions can help explain the larger declines in economic output. |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:qsh:wpaper:256106&r=gro |
| By: | Felicitas Nowak-Lehmann D. (Georg-August-Universität Göttingen / Germany); Elena Gross (University of Bayreuth / Germany) |
| Abstract: | Development aid does not always exert the desired positive effect on economic growth in recipient countries and it is even feared that it may reduce total factor productivity (TFP) and may discourage recipient countries’ efforts. This study seeks to contribute to the research on aid transmission channels, in particular on macroeconomic channels such as private investment, domestic savings and the real exchange rate. By using panel data from 27 recipient countries over a 25-year period (1985-2009) this study aims to analyze the impact of the different forms of aid (grants, loans, bilateral and multilateral) on productivity, controlling for institutional factors and economic policy, using time-series panel techniques and focusing solely on the aid-productivity link. In order to examine possible vicious circles of aid, we run quantile regressions to ascertain whether aid is less effective in countries from the lowest TFP quantiles. To check for TFP-impeding conditions that are supposedly present in those quantiles, threshold regressions are performed to detect the ineffectiveness of aid below certain thresholds, including those of institutional quality, investment-to-GDP ratio, or domestic savings-to-GDP ratio. We find differences between the impact of aid in the form of grants and loans and the impact of bilateral and multilateral aid, with evidence that aid reduces TFP growth in the 0.1 and 0.25 quantiles. The search for sensible threshold values of aid impeding factors (institutional quality or key macroeconomic variables) was without result. |
| Keywords: | TFP growth, foreign aid, quantile regression, smooth transition models |
| JEL: | O4 O11 F35 C21 C22 |
| Date: | 2015–10–20 |
| URL: | http://d.repec.org/n?u=RePEc:got:iaidps:232&r=gro |
| By: | Iñaki Iriarte Goñi (Universidad de Zaragoza, Zaragoza, Spain); Enric Tello Aragay (Universitat de Barcelona, Barcelona, Spain) |
| Abstract: | This work introduces some concepts, tools and works useful to analyse modern economic growth in Spain in historical perspective, taking into account some of its environmental aspects. The paper is based on the idea, supported by ecological economics, that the economy is and has been historically an open subsystem constantly interacting with society and ecosystems. In this general framework we review the main works analysing Spanish economic history matters from this specific perspective or friendly points of view. We believe that this approach to economic history is convenient for bringing to light some aspects and problems that usually remind hidden in the main stream of economic history analysis, and is, therefore, helpful for a better understanding of historical economic growth and economic development and its consequences. |
| Keywords: | Modern Economic Growth, Environmental History, Ecological footprint, Social metabolism, socio-ecological transitions |
| JEL: | N0 N5 Q57 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:ahe:dtaehe:1516&r=gro |
| By: | Stephen Broadberry; Johann Custodis; Bishnupriya Gupta |
| Abstract: | Estimates of Indian GDP are constructed from the output side for 1600-1871, and combined with population data. Indian per capita GDP declined steadily during the seventeenth and eighteenth centuries before stabilising during the nineteenth century. As British growth increased from the mid-seventeenth century, India fell increasingly behind. Whereas in 1600, Indian per capita GDP was over 60% of the British level, by 1871 it had fallen to less than 15%. These estimates place the origins of the Great Divergence firmly in the early modern period, but also suggest a relatively prosperous India at the height of the Mughal Empire. They also suggest a period of "strong" deindustrialisation during the first three decades of the nineteenth century, with a small decline of industrial output rather than just a declining share of industry in economic activity. |
| Keywords: | Britain; comparison; Indian GDP |
| JEL: | N10 N30 N35 O10 O57 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:56838&r=gro |
| By: | Anderson, James (Department of Economics and NBER); Larch, Mario (Rechts- und Wirtschaftswissenschaftliche Facultät); Yotov, Yoto (School of Economics, ERI-BAS & CESifo) |
| Abstract: | We build and estimate a structural dynamic general equilibrium model of growth and trade. Trade affects growth through changes in consumer and producer prices that in turn stimulate or impede physical capital accumulation. At the same time, growth affects trade, directly through changes in country size and indirectly through altering the incidence of trade costs. The model combines structural gravity with a capital accumulation specification of the transition between steady states. Theory translates into an intuitive econometric system that identifies the causal impact of trade on income and growth, and also delivers estimates of the key structural parameters in our model. Counterfactual experiments based on the estimated model give evidence for strong dynamic relationships between growth and trade, resulting in doubling of the static gains from trade liberalization. |
| Keywords: | Trade; Growth; Income; Trade Liberalization; Capital Accumulation |
| JEL: | F10 F43 O40 |
| Date: | 2015–07–10 |
| URL: | http://d.repec.org/n?u=RePEc:ris:drxlwp:2015_002&r=gro |
| By: | Mencinger, Jernej; Verbic, Miroslav; Aristovnik, Aleksander |
| Abstract: | The paper empirically explores the factor of public debt which considerably changes the transmission mechanism of fiscal policy effects to economic activity in the short term. We examined and evaluate the direct effect of higher indebtedness in the public sector on economic growth for a panel dataset of overall 36 countries (25 EU member states and 11 OECD countries). Our examination will shed light on the current debt problem by identifying a possible non-linear relationship between the level of public debt and economic growth, with an explicit focus to determine the threshold values for our sample of countries. Our sample is divided into subgroups distinguishing between so-called developed, covering the period 1980–2010, and emerging economies, covering the period 1995–2010. Extending our previous research we are particularly interested in the existence of a non-linear impact of government debt on the behaviour of GDP growth. In order to account for the impact of the level of the debt-to-GDP ratio on the real growth rate of GDP, we employ a panel estimation on a generalized economic growth model augmented with a debt variable, while also considering some methodological issues like the problems of heterogeneity and endogeneity. The results confirm the general theoretical assumption that at low levels of public debt the impact on growth is positive, whereas beyond a certain debt turning point a negative effect on growth prevails. Further, we calculated that the debt-to-GDP turning point, where the positive effect of accumulated public debt inverts into a negative effect, is roughly between 90% and 94% for developed economies. Yet for emerging countries the debt-to-GDP turning point is lower, namely between 44% and 45%. Therefore, we can confirm our hypothesis that the threshold value for emerging is lower than for the developed in our sample. |
| Keywords: | fiscal policy; public debt; economic growth; panel analysis; turning points; EU |
| JEL: | C23 H63 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:67704&r=gro |
| By: | Asongu, Simplice; Kodila-Tedika, Oasis |
| Abstract: | A 2015 World Bank report on attainment of Millennium Development Goals concludes that the number of extremely poor has dropped substantially in all regions with the exception of Sub-Saharan Africa. We assess if poverty is in the African gene by revisiting the findings of Ashraf and Galor (2013, AER) and reformulating the ‘Out of Africa Hypothesis’ into a ‘Genetic Diversity Hypothesis’ for a ‘Within Africa Analysis’. We motivate this reformulation with five shortcomings arising for the most part from the 2015 findings of the African Gerome Variation Project, notably: limitations in the concept of space, African dummy in genetic diversity, linearity in migratory patterns, migratory origins and underpinnings of genetic diversity in Africa. Ashraf and Galor have concluded that cross-country differences in development can be explained by genetic diversity in a Kuznets pattern. Our results from an exclusive African perspective confirm the underlying hypothesis in a contemporary context, but not in the historical analysis. From a historical context, the nexus is U-shaped for migratory distance, mobility index and predicted diversity while for the contemporary analysis; it is hump-shaped for ancestry-adjusted predicted diversity. Hence, poverty is not in the African gene from a within-Africa comparative standpoint. Policy implications are discussed. |
| Keywords: | Africa; Genetic diversity; Comparative economic development |
| JEL: | N10 N30 N50 O10 O50 Z10 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:67849&r=gro |
| By: | Kodila-Tedika, Oasis; Asongu, Simplice |
| Abstract: | This paper explores the determinants of intelligence by focusing on the role played by barriers to the diffusion of competence and human capital. The results based on cross-sectional data from 167 countries consisting of 1996-2009 averages suggest that, genetic distance to global frontiers has a negative relationship with human capital. Countries that are genetically far from leading nations tend to have lower levels of human capital with the negative correlation from the USA frontier higher relative to the UK frontier. The sign is consistent with the relationship of genetic diversity and robust to the control of macroeconomic, geographical, institutional and influential variables. Policy implications are discussed. |
| Keywords: | Intelligence, Human Capital, Genetic distance |
| JEL: | F15 G15 N10 O16 O50 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:67850&r=gro |