nep-gro New Economics Papers
on Economic Growth
Issue of 2016‒11‒13
nine papers chosen by
Marc Klemp
Brown University

  1. Two Blades of Grass: The Impact of the Green Revolution By Gollin, Douglas; Hansen, Casper Worm; Wingender, Asger
  2. Accounting for the ‘Little Divergence’ What drove economic growth in pre-industrial Europe, 1300-1800? By Alexandra M. de Pleijt; Jan Luiten van Zanden
  3. Glimpsing the End of Economic History? Unconditional Convergence and the Missing Middle Income Trap - Working Paper 438 By Sutirtha Roy , Martin Kessler and Arvind Subramanian
  4. Issues in Statistical Modelling of Human Capital and Economic Growth Nuxus: A Cross Country Analysis By Verda Salman; Aliya H. Khan; Madeeha Gohar Qureshi
  5. Towards an explanation of inequality in pre-modern societies:the role of colonies and high population density By Milanovic, Branko
  6. The Global Diffusion of Ideas By Buera, Francisco J.; Oberfield, Ezra
  7. The implications of automation for economic growth and the labor share By Prettner, Klaus
  8. Changes or levels? Reassessment of the relationship between top-end inequality and growth By Tuominen Elina
  9. The Impact of Formal and Informal Institutions on Economic Performance: A Cross-Country Analysis By Yasir Khan; Attiya Yasmin Javid

  1. By: Gollin, Douglas; Hansen, Casper Worm; Wingender, Asger
    Abstract: We examine the impact of the Green Revolution, defined as the diffusion of high-yielding crop varieties (HYVs), on aggregate economic outcomes in developing countries during the second half of the 20th century. We use time variation in the development and diffusion of HYVs of 10 major crops, and the spatial variation in agro-climatically suitability for growing them, to identify the causal effects of adoption. In a sample of 84 counties, we estimate that a 10 percentage points increase in HYV adoption increases GDP per capita by about 15 percent. This effect is fully accounted for by a combination of the direct effect on crop yields, factor adjustment in agriculture, and structural transformation. Our analysis also reveals that the Green Revolution reduced fertility and that the reduction was only partly offset by decreasing mortality rates. The net effect on population growth was therefore negative.
    Keywords: agriculture; Green Revolution; High Yielding Variety crops; macoeconomic development; productivity shock
    JEL: N50 O11 O13 O50 Q16
    Date: 2016–11
  2. By: Alexandra M. de Pleijt (Utrecht University); Jan Luiten van Zanden (Utrecht University)
    Abstract: We test various hypotheses about the causes of the Little Divergence, using new data and focusing on trends in GDP per capita and urbanization. We find evidence that confirms the hypothesis that human capital formation was the driver of growth, and that institutional changes (in particular the rise of active Parliaments) were closely related to economic growth. We also test for the role of religion (the spread of Protestantism): this has affected human capital formation, but does not in itself have an impact on growth.
    Keywords: Europe, Economic growth, Little Divergence, Human capital formation
    JEL: N13 N33 O40 O52
    Date: 2016–11
  3. By: Sutirtha Roy , Martin Kessler and Arvind Subramanian
    Abstract: This paper suggests a reinterpretation of global growth—encompassing notions of unconditional convergence and the middle income trap—in the past 50 years through the lens of growth theory. We innovate by studying two modes of convergence: a classic “Solow” model where poorer countries catch up by growing faster on average; and a new “Wilde” model where catch-up growth is interpreted as growing faster than the frontier country, the United States. We apply these modes to both countries and people as units of analysis. We find that convergence has occurred faster and began earlier than widely believed.
    Keywords: economic growth, convergence, middle income trap
    JEL: O10 O15 O47
    Date: 2016–10
  4. By: Verda Salman; Aliya H. Khan; Madeeha Gohar Qureshi (Pakistan Institute of Development Economics, Islamabad)
    Abstract: The human capital and growth relationship has been subject to a lot of debate in economic literature. The empirical growth models are beset with problems ranging from theoretical frameworks and statistical modelling to estimation procedures. Due to non-availability of precise human capital variable, theoretical knowledge fails when pitched against empirical data. This paper is an endeavour to answer four main questions that have prominently figured out in this debate: Is there a direct interplay between human capital and growth or not? Are parametric techniques incapable of capturing nonlinear aspects of human capital-growth relationship as compared to semi parametric techniques? Are estimates of human capital sensitive to proxy of human capital variables? Are estimates of human capital sensitive to estimation techniques? A data of 32 developing countries has been taken as sample for this study. Our findings reveal that human capital has a well established role in accelerating growth through both its ‘level effects’ and ‘rate effects’. The results are not sensitive to definition of education variable but are rather technique dependent. The semi parametric model provides sufficient evidence for non linearity in human capital-growth relationship contrary to parametric models.
    Keywords: Human Capital, Economic Growth, Total Factor Productivity, Semi Parametric
    JEL: C14 C23 O47
    Date: 2015
  5. By: Milanovic, Branko
    Abstract: Using the newly expanded set of 40 social tables from pre-modern societies, the paper tries to find out the factors associated with the level of inequality and the inequality extraction ratio (how close to the maximum inequality have the elites pushed the actual inequality). We find strong evidence that elites in colonies were more extractive, and that more densely populated countries exhibited lower extraction ratios. We propose several possibilities linking high population density to low inequality and to low elite extraction.
    Keywords: Inequality, inequality extraction ratio, pre modern
    JEL: I3 I30 N0 N3
    Date: 2016–11–02
  6. By: Buera, Francisco J. (Federal Reserve Bank of Chicago); Oberfield, Ezra (Federal Reserve Bank of Chicago)
    Abstract: We provide a tractable theory of innovation and technology diffusion to explore the role of international trade in the process of development. We model innovation and diffusion as a process involving the combination of new ideas with insights from other industries or countries. We provide conditions under which each country's equilibrium frontier of knowledge converges to a Frechet distribution, and derive a system of differential equations describing the evolution of the scale parameters of these distributions, i.e., countries' stocks of knowledge. In particular, the growth of a country's stock of knowledge depends only on its trade shares and the stocks of knowledge of its trading partners. We use the framework to quantify the contribution of bilateral trade costs to cross-sectional TFP differences, long-run changes in TFP, and individual post-war growth miracles.
    Keywords: Frechet distribution; global outlook; technology diffusion; trade
    JEL: F1 F43 O33 O47
    Date: 2015–12–31
  7. By: Prettner, Klaus
    Abstract: We introduce automation into a standard model of capital accumulation and show that (i) there is the possibility of perpetual growth, even in the absence of technological progress; (ii) the long-run economic growth rate declines with population growth, which is consistent with the available empirical evidence; (iii) there is a unique share of savings diverted to automation that maximizes long-run growth; (iv) the labor share declines with automation to an extent that fits to the observed pattern over the last decades.
    Keywords: automation,robots,machine learning,perpetual economic growth,declining labor share,inequality
    JEL: O11 O33 O41
    Date: 2016
  8. By: Tuominen Elina (School of Management, University of Tampere)
    Abstract: This study explores the association between top-end inequality and subsequent economic growth. The motivation stems from the results of Banerjee and Duflo (2003), who study nonlinearities in the inequality–growth relationship and find that changes in the Gini coefficient, in any direction, are associated with lower future growth. The current study addresses the issue of nonlinearity and exploits the top 1% income share series in 25 countries from the 1920s to the 2000s in various specifications. First, this study finds that the association between the level of top 1% share and growth is more evident in the data than the link between the change in top 1% share and growth. Second, the main results on the top 1% shares relate primarily to currently “advanced” economies; a negative association is discovered between the level of top-end inequality and growth, but this relationship is likely to become weaker in the course of economic development. Third, this study illustrates that the sample composition deserves attention in inequality–growth studies.
    Keywords: inequality; top incomes; growth; nonlinearity; longitudinal data
    Date: 2016–09
  9. By: Yasir Khan (Pakistan Institute of Development Economics, Islamabad); Attiya Yasmin Javid (Pakistan Institute of Development Economics, Islamabad)
    Abstract: This study is an attempt to understand the relative contribution of culture and economic freedom to economic growth. Through applying fixed effect to the panel of fifty four developed, developing and less developed countries for the period of 1980 to 2007, study explores direct and indirect influence of culture relative to economic freedom on economic performance. The analysis shows that human capital is an appropriate transmission channel for cultural effects. It reveals that culture play fundamental role in shaping human behaviour that further lead to determine the level of accumulation and productivity of human capital. In this analysis significance of the culture relative to economic freedom is confirmed after the inclusion of a transmission channel for cultural influences. Study shows that cross-country differences in economic growth are fundamentally related to the differences in level of underlying cultural values like trust, respect, self-determination and obedience. To reduce differences in productivity and accumulation rate of human capital across countries this analysis advocates integration of cultural values into national education policy and investment in cultural capital.
    Keywords: Economic Freedom, Culture, Formal Institutions, Informal Institutions, Human Capital
    Date: 2015

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