nep-gro New Economics Papers
on Economic Growth
Issue of 2016‒11‒20
twelve papers chosen by
Marc Klemp
Brown University

  1. Two Blades of Grass: The Impact of the Green Revolution By Douglas Gollin; Casper Worm Hansen; Asger Wingender
  2. Unreal Wages? A New Empirical Foundation for the Study of Living Standards and Economic Growth in England, 1260-1860 By Jane Humphries; Jacob Weisdorf
  3. The contribution of female health to economic development By David E. Bloom; Michael Kuhn; Klaus Prettner
  4. Rainfall Risk and Fertility: Evidence from Farm Settlements during the American Demographic Transition By Grimm, Michael
  5. Firm Dynamics in the Neoclassical Growth Model By Licandro, Omar
  6. Balanced Growth Despite Uzawa By Gene M. Grossman; Elhanan Helpman; Ezra Oberfield; Thomas Sampson
  7. Growth-enhancing effect of openness to trade and migrations: What is the effective transmission channel for Africa? By Dramane Coulibaly; Blaise Gnimassoun; Valérie Mignon
  8. The Economic Development and the Rise and Fall of Únĕtice Populations: A Case of Ecologically Unsustainable Economic Growth? Initial Thoughts By Tisdell, Clem; Svizzero, Serge
  10. Asset bubbles, labor market frictions, and R&D-based growth By Ken-ichi Hashimoto; Ryonghun Im
  11. The DDT Effect: The case of Economic Growth, Public Debt and Democracy Relationship By Adom, Philip Kofi
  12. Patterns of Manufacturing Growth in Sub-Saharan Africa: From Colonization to the Present By Austin, Gareth; Frankema, Ewout; Jerven, Morten

  1. By: Douglas Gollin; Casper Worm Hansen; Asger Wingender
    Abstract: We examine the impact of the Green Revolution, defined as the discusion 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 discusion 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 ofset by decreasing mortality rates. The net effect on population growth was therefore negative.
    Keywords: Green Revolution; High Yielding Variety Crops; Productivity Shock; Macroeconomic Development
    JEL: N50 O11 O13 O50 Q16
    Date: 2016
  2. By: Jane Humphries; Jacob Weisdorf
    Abstract: Abstract: Existing measures of historical real wages suffer from the fundamental problem that workers’ annual incomes are estimated on the basis of day wages without knowing the length of the working year. We circumvent this problem by presenting a novel wage series of male workers employed on annual contracts. We use evidence of labour market arbitrage to argue that existing real wage estimates are badly off target, because they overestimate the medieval working year but underestimate the industrial one. Our data suggests that modern economic growth began two centuries earlier than hitherto thought and was driven by an ‘Industrious Revolution’.
    Keywords: England, industrial revolution, industrious revolution, labour input, living standards, wages, Malthusian model.
    JEL: J3 J4 J5 J6 J7 J8 N33
    Date: 2016–09–20
  3. By: David E. Bloom (Harvard T. H. Chan School of Public Health); Michael Kuhn (Vienna Institute of Demography); Klaus Prettner (Institute of Statistics and Mathematical Methods in EconomicsAuthor-Email:
    Abstract: We analyze the economic consequences for less developed countries of investing in female health. In so doing we introduce a novel micro-founded dynamic general equilibrium framework in which parents trade off the number of children against investments in their education and in which we allow for health-related gender differences in productivity. We show that better female health speeds up the demographic transition and thereby the take-off toward sustained economic growth. By contrast, male health improvements delay the transition and the take-off because ceteris paribus they raise fertility. According to our results, investing in female health is therefore an important lever for development policies. However, and without having to assume anti-female bias, we also show that households prefer male health improvements over female health improvements because they imply a larger static utility gain. This highlights the existence of a dynamic trade-off between the short-run interests of households and long-run development goals. Our numerical analysis shows that even small changes in female health can have a strong impact on the transition process to a higher income level in the long run. Our results are robust with regard to a number of extensions, most notably endogenous investment in health care. JEL Codes: O11, I15, I25, J13, J16
    Keywords: economic development, educational transition, female health, fertility transition, quality-quantity trade-off
    Date: 2016–10
  4. By: Grimm, Michael (University of Passau)
    Abstract: Fertility is a main driver and outcome of long-term growth. Yet, fertility may not only interact with the level of income but also with its volatility. In pre-modern economies where formal social security was largely absent, fertility decisions may also have been made in view of insuring income shocks which were hard to predict such as an income shock due to crop disease, a shortage in rainfall, a case of serious illness or a job loss. In this paper, I focus on the demographic transition in the United States covering the period 1870 to 1930 and explore whether variation in fertility among American settlers can be explained by variations in exposure to rainfall risks. Identification relies on fertility differences between farm and non-farm households within counties and over time. The results suggest that increased rainfall risk does indeed increase fertility among farming households but not among households with other occupations that are less dependent on rainfall. The channel is robust to other relevant forces such as returns to education and children's survival. The analysis also shows that this effect is reduced if risk management devices such as irrigation systems, formal financial institutions or machinery emerge. The findings contribute to the understanding of the demographic transition in the US and in risk-prone areas more generally.
    Keywords: demographic transition, rainfall risk, income shocks, insurance, historical data
    JEL: J13 N31 N32 O12 Q12
    Date: 2016–11
  5. By: Licandro, Omar
    Abstract: This paper integrates firm dynamics theory into the Neoclassical growth framework. It embeds selection into an otherwise standard dynamic general equilibrium model of one good, two production factors (capital and labor) and competitive markets. Selection relies on firm specific investment: i) capital is a fixed production factor --playing the role of an entry cost, ii) the productivity of capital is firm specific, but observed after investment, iii) firm specific capital is partially reversible --its opportunity cost plays the same role as fixed production costs. At equilibrium, aggregate technology is Neoclassical, but the average quality of capital is endogenous and positively related to selection; due to capital irreversibility, the marginal product of capital is larger than the user cost and capital depreciation positively depends on selection. At steady state, output per capita and welfare both raise with selection; rendering capital more reversible or increasing the variance of the idiosyncratic shock both raise selection, productivity, output per capita and welfare.
    Keywords: Capital irreversibility; Entry and Exit; Firm Dynamics; Hopenhayn; Neoclassical growth model; Ramsey; selection
    JEL: O3 O4
    Date: 2016–11
  6. By: Gene M. Grossman; Elhanan Helpman; Ezra Oberfield; Thomas Sampson
  7. By: Dramane Coulibaly; Blaise Gnimassoun; Valérie Mignon
    Abstract: This paper investigates the growth-enhancing effect of openness to trade and to migration by focusing on African countries. Relying on robust estimation techniques dealing with both endogeneity and omitted variables issues, our results put forward the importance of accounting for the type of the partner country. We find evidence that while trade between Africa and industrialized countries has a clear and robust positive impact on Africa’s standards of living, trade with developing countries fails to be growth-enhancing. Moreover, our findings show that migration has no significant effect on per capita income in Africa regardless of the partner. Finally, exploring the trade openness transmission channel, we establish that the growth-enhancing effect of Africa’s trade with industrialized countries mainly occurs through an improvement in total factor productivity..
    Keywords: Trade, International migration, Income per person, Africa.
    JEL: F22 F4 O4 O55
    Date: 2016
  8. By: Tisdell, Clem; Svizzero, Serge
    Abstract: After a long period of substantial economic growth and population increase in the Early Bronze Age, the reason(s) for the relatively rapid disappearance of Únĕtice populations in Central Europe and the subsequent lack of population in much of their former territory for around 200 years remains a mystery. Various theories have been proposed for these developments, such as changed long distance trade routes or the depletion of materials for bronze-making. However, these fail to explain why large areas formerly occupied by the Únĕtice remained unoccupied (or virtually so) for so long after their abandonment by the Únĕtice. We argue on the basis of demographic and other scientific evidence that the collapse of the Únĕtice was in all probability primarily the result of unsustainable ecological development. Human-induced changes to ecosystems eventually reduced agropastoral productivity, substantially reduced the standard of living of the Únĕtice and resulted in the abandonment of many of their settlements. The extent and nature of ecological damage was such that it took much time for natural ecosystems to recover sufficiently before the affected former Únĕtice areas were economically suitable for resettlement. The possibility that resource shortages for bronze-making and changed trade routes contributed to the unsustainable development of Únĕtice settlements is also considered.
    Keywords: Agropastoral sustainability, agricultural surplus, Central Europe, Early Bronze Age, ecological sustainability, ecosystem change, human migration, natural resource depletion, population pressures, sustainable development, Únĕtice., Community/Rural/Urban Development, N53, Q00, Q01,
    Date: 2016–10
  9. By: Elena PELINESCU (Institute of Economic Forecasting, Romanian Academy)
    Abstract: The human capital is the main driver of development and economic growth. This paper is focused on human capital and tries to show how the human capital, as an important economic factor contributes to the growth of the economy. Romer (1969) identified a positive relation between the initial level of literacy and its rate of growth and the increase of income per capita. Benhabib, and Spiegel (1994) showed that the growth rate of total factor productivity depends on the human capital stock level. Wilson and Briscoe (2004) in a literature review of relation between human capital and economic performance at macroeconomic level highlighted that the increases in economic growth across the EU are associated with increases in both education and training. This paper is focused on the relation between human capital and development in Romania and uses econometric techniques to highlight the role of human capital in increasing the country’s wealth.
    Keywords: human capital, development, inovation
    JEL: E24 J24 F63 O15 O31
    Date: 2016–11
  10. By: Ken-ichi Hashimoto (Graduate School of Economics, Kobe University); Ryonghun Im (Japan Society for the Promotion of Science, Research Fellowship for Young Scientists, Graduate School of Economics, Kobe University)
    Abstract: Employing an overlapping generations model of research and development (R&D)-based growth with labor market frictions, this paper examines how employment changes induced by labor market frictions influence asset bubbles and long-run economic growth. Asset bubbles can (cannot) exist when the employment rate is high (low), which leads to higher (lower) economic growth through labor market efficiency. We also explore the steady state and transitional dynamics of bubbles, economic growth, and employment. Furthermore, we show that policy or parameter changes that have a negative influence on the labor market can lead to a bubble burst.
    Keywords: overlapping generations, asset bubbles, labor market friction, employment rate, R&D
    JEL: J64 O41 O42
    Date: 2016–11
  11. By: Adom, Philip Kofi
    Abstract: This study contributes to the research on the economic growth, public debt and democracy relationship using the case of Ghana. We posit that, (1) the capacity of a country to tolerate higher debt is dependent on the quality of institutions, and (2) the growth enhancing effect of democracy depends on the initial debt levels. The results point to an inverse relationship between the quality of institution and the capacity of the country to tolerate higher debt. Further, the growth enhancing effect of democracy is crucially dependent on the initial debt-to-GDP ratio. Several robustness checks conducted confirmed these results.
    Keywords: Economic growth; Public debt; Democracy
    JEL: H63 O4 O43
    Date: 2016–11–11
  12. By: Austin, Gareth; Frankema, Ewout; Jerven, Morten
    Abstract: This paper reviews the 'long twentieth-century' development of 'modern' manufacturing in Sub-Saharan Africa from colonization to the present. We argue that classifying Africa generically as a 'late industrializer' is inaccurate. To understand the distinctively African pattern of manufacturing growth, we focus our discussion on the dynamic interplay between the region's specific endowment structures, global economic relationships and government policies. We conclude that the case of Sub-Saharan Africa is best characterized as interrupted industrial growth instead of sustained convergence on world industrial leaders. This is partly because, until very recently, the factor endowments made it very costly for states to pursue industrialization; and partly because successive rulers, colonial and post-colonial, have rarely had both the capacity to adopt and the dedication to sustain policies that modified the region's existing comparative advantage in primary production, by using their fiscal and regulatory powers effectively to promote industrialization.
    Keywords: Colonial institutions; economic history; Industrialization; Manufacturing; Sub-Saharan Africa
    JEL: N17 N60 O14
    Date: 2016–11

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