nep-gro New Economics Papers
on Economic Growth
Issue of 2016‒12‒04
fifteen papers chosen by
Marc Klemp
Brown University

  1. "Population Growth and Carbon Emissions" By Gregory Casey; Oded Galor
  2. Long-range growth: economic development in the global network of air links By Filipe Campante; David Yanagizawa-Drott
  3. Long-Run Consequences of Labor Coercion: Evidence from Russian Serfdom By Johannes C. Buggle; Steven Nafziger
  4. The Global Diffusion of Ideas By Ezra Oberfield; Francisco Buera
  5. Mortality among European settlers in pre-colonial West Africa: The “White Man’s Grave” revisited By Öberg, Stefan; Rönnbäck, Klas
  6. Market Integration as a Mechanism of Growth By Keller, Wolfgang; Shiue, Carol H
  7. Does one size fit all? The impact of cognitive skills on economic growth By Nadir Altinok; Abdurrahman Aydemir
  8. Economic Institutions and Comparative Economic Development: A Post-Colonial Perspective By Daniel L. Bennett; Hugo J. Faria; James D. Gwartney; Daniel R. Morales
  9. Growth through Heterogeneous Innovations By Akcigit, Ufuk; Kerr, William R.
  10. Symbioses imperative and convenient: The Evolution of Crony Capitalism in Puebla, Mexico, 1920-1940 By Paxman, Andrew
  11. On the Dispensability of New Transportation Technologies: Evidence from Colonial Railroads in Nigeria By Okoye, Dozie; Pongou, Roland; Yokossi, Tite
  12. General Purpose Technologies in Theory, Applications and Controversy: A Review By Clifford Bekar; Kenneth Carlaw; Richard Lipsey
  13. Economic growth, natural disasters and climate change: New empirical estimates By Ramon Lopez; Vinod Thomas; Pablo Troncoso
  14. Democracy and income inequality: revisiting the long and short-term relationship By Zlatko Nikoloski
  15. Japan’s Ultimately Unaccursed Natural Resources-Financed Industrialization By Randall Morck; Masao Nakamura

  1. By: Gregory Casey; Oded Galor
    Abstract: We provide evidence that lower fertility can simultaneously increase income per capita and lower carbon emissions, eliminating a trade-off central to most policies aimed at slowing global climate change. We estimate the effect of lower fertility on carbon emissions accounting for the fact that changes in fertility patterns affect carbon emissions through three channels total population, the age structure of the population, and economic output. Our analysis proceeds in two steps. First, we estimate a version of the STIRPAT equation on an unbalanced yearly panel of cross-country data from 1950-2010. We demonstrate that the coefficient on population is nearly seven times larger than the coefficient on income per capita and that this difference is statistically significant. Thus, regression results imply that 1% slower population growth could be accompanied by an increase in income per capita of nearly 7% while still lowering carbon emissions. In the second part of our analysis, we use a recently constructed economic-demographic model of Nigeria to estimate the effect of lower fertility on carbon emissions accounting for the impacts of fertility on population growth, population age structure, and income per capita. The model was constructed to estimate the effect of lower fertility on economic growth, making it well-suited for this application. We find that by 2100 C.E., moving from the medium to the low variant of the UN fertility projection leads to 35% lower yearly emissions and 15% higher income per capita. These results strongly suggest that population policies could be a part of the approach to combating global climate change.
    Date: 2016
  2. By: Filipe Campante; David Yanagizawa-Drott
    Abstract: We study the impact of international long-distance flights on the global spatial allocation of economic activity. To identify causal effects, we exploit variation due to regulatory and technological constraints which give rise to a discontinuity in connectedness between cities at a distance of 6000 miles. We show that these air links have a positive effect on local economic activity, as captured by satellite-measured night lights. To shed light on how air links shape economic outcomes, we first present evidence of positive externalities in the global network of air links: connections induce further connections. We then find that air links increase business links, showing that the movement of people fosters the movement of capital. In particular, this is driven mostly by capital flowing from high-income to middle-income (but not low-income) countries. Taken together, our results suggest that increasing interconnectedness generates economic activity at the local level by inducing links between businesses, but also gives rise to increased spatial inequality locally, and potentially globally.
    Keywords: Globalization, air travel, connections, economic activity, local development, cities, business links, FDI, convergence, spatial inequality
    JEL: F15 F21 F23 F63 O11 O18 O19 O47 R11 R12 R40
    Date: 2016–11
  3. By: Johannes C. Buggle (University of Lausanne); Steven Nafziger (Williams College)
    Abstract: This paper examines the long-run consequences of Russian serfdom. We use novel data measuring the intensity of labor coercion at the district level in 1861. Our results show that a greater legacy of serfdom is associated with lower economic well-being today. We apply an IV strategy that exploits the transfer of serfs from monastic lands in 1764 to establish causality. Exploring mechanisms, we find a positive correlation between the earlier experience of serfdom and pre-Soviet urbanization and land inequality, with negative implications for human capital investment and agglomeration over the long-run.
    Keywords: Labor Coercion, Serfdom, Development, Russia, Persistence
    JEL: N33 N54 O10 O43
    Date: 2016–10
  4. By: Ezra Oberfield (Princeton University); Francisco Buera (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 differ- ential 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.
    Date: 2016
  5. By: Öberg, Stefan (Department of Economic History, School of Business, Economics and Law, Göteborg University); Rönnbäck, Klas (Department of Economic History, School of Business, Economics and Law, Göteborg University)
    Abstract: We have created the first longitudinal dataset following European employees of the English Royal African Company during their time in West Africa, 1683–1766. The mortality was catastrophically high with limited geographical differences. Tropical diseases and epidemics thereof, contributed to the high mortality and strong variations over time. The risk was highest for the men who had just arrived from Europe but remained high also after they had spent several years on the coast. The death rate of the Europeans was increased by both the share of newcomers and by the total number of men present on the coast.
    Keywords: Economic History; Mortality; West Africa; Pre-colonial; “White Man’s Grave”
    JEL: J10 N37
    Date: 2016–11–22
  6. By: Keller, Wolfgang; Shiue, Carol H
    Abstract: This paper focuses on market integration as a mechanism through which institutions affect growth by examining city growth in 19th century Germany, when some cities experienced deep institutional reform as a result of French rule. Employing an instrumental-variables approach, we show evidence for a hierarchy of growth factors in which institutions affect market integration more than market integration affects institutions. It was institutional improvements that were crucial to market integration, rather than just declining transport costs, which increased city growth during this time period. The institutional reforms, however, were transmitted through the mechanism of market integration. This created a much larger impact on city growth compared to the institutional impact independent from the market integration mechanism. The approach we take can be applied to other causes of economic growth.
    Date: 2016–11
  7. By: Nadir Altinok (BETA - Bureau d'Economie Théorique et Appliquée - CNRS - Centre National de la Recherche Scientifique - UL - Université de Lorraine - Université de Strasbourg, IREDU - Institut de recherche sur l'éducation : Sociologie et Economie de l'Education - UB - Université de Bourgogne); Abdurrahman Aydemir (Sabanci University)
    Abstract: This paper tests for heterogeneous effects of cognitive skills on economic growth across countries. Using a new extended dataset on cognitive skills and controlling for potential endogeneity, we find that the magnitude of the effect is about 60 per cent higher for low-income countries compared to high-income countries, and it more than doubles when low TFP countries are compared to high TFP countries. There are also marked differences across geographic regions. Using data on the share of the population with advanced and minimum skill levels, our results also indicate that high-income countries should focus on increasing the number of high skilled human capital, while countries from Sub-Saharan Africa would benefit more by investing in the development of basic skills.
    Keywords: Education, Development, Africa, Cognitive Skills, Growth, Heterogeneity.
    Date: 2016–10–04
  8. By: Daniel L. Bennett (Florida State University); Hugo J. Faria (University of Miami); James D. Gwartney (Florida State University); Daniel R. Morales (Florida State University)
    Abstract: Existing literature suggests that either colonial settlement conditions or the identity of colonizer were influential in shaping the post-colonial institutional environment, which in turn has impacted long-run economic development, but has treated the two potential identification strategies as substitutes. We argue that the two factors should instead be treated as complementary and develop a novel identification strategy that simultaneously accounts for both settlement conditions and colonizer identity to estimate the potential causal impact of a broad cluster of economic institutions on log real GDP per capita for a sample of former colonies. Using population density in 1500 as a proxy for settlement conditions, we find that the impact of settlement conditions on institutional development is much stronger among former British colonies than colonies of the other major European colonizers. Conditioning on several geographic factors and ethno-linguistic fractionalization, our baseline 2SLS estimates suggest that a standard deviation increase in economic institutions is associated with a three-fourths standard deviations increase in economic development. Our results are robust to a number of additional control variables, country subsample exclusions, and alternative measures of institutions, GDP, and colonizer classifications. We also find evidence that geography exerts both an indirect and direct effect on economic development.
    Keywords: Colonization, Comparative Economic Development, Growth, Geography, Institutions Publication Status: Working Paper
    JEL: F54 O1 O4 P5
    Date: 2016–11–12
  9. By: Akcigit, Ufuk; Kerr, William R.
    Abstract: We build a tractable growth model where multi-product incumbents invest in internal innovations to improve their existing products, while new entrants and incumbents invest in external innovations to acquire new product lines. External and internal innovations generate heterogeneous innovation qualities, and firm size affects innovation incentives. This framework allows us to analyze how different types of innovation contribute to economic growth and how the firm size distribution can have important consequences for the types of innovations realized. Our model aligns with many observed empirical regularities, and we quantify our framework by matching Census Bureau operating data with patent data for U.S. firms. We observe that internal innovation scales moderately faster with firm size than external innovation.
    Keywords: Citations; Endogenous Growth; Entrepreneurs.; External; innovation; Internal; patents; Research and Development; Scientists
    JEL: L16 O31 O33 O41
    Date: 2016–11
  10. By: Paxman, Andrew
    Abstract: Several historians have used “crony capitalism” to label the cozy and inefficient relationships between business and political elites prevailing in Mexico since the 19th century. But it is a nebulous term, stigmatizing various behaviors not all of which are harmful to state formation or economic growth. I seek to solve this problem of conceptual vagueness by differentiating between forms of state-capital interdependence. The first, necessary to both parties at times of uncertainty, I term a “symbiotic imperative,” which operates between institutions and purports to serve the greater good. The second, involving exchanges of favors that are merely advantageous, I term “symbiotic convenience,” which tends to operate at a more interpersonal level. As a case study, I consider relations between governors and the leading industrialist William Jenkins in Puebla after the Revolution.
    Keywords: crony capitalism, symbiotic imperative, symbiotic convenience, William Jenkins, Mexico, Puebla,
    JEL: N4 N46
    Date: 2016–11–25
  11. By: Okoye, Dozie; Pongou, Roland; Yokossi, Tite
    Abstract: We examine Fogel's influential hypothesis that new transportation technologies may be dispensable if pre-existing technologies are viable or can simply be improved. Exploiting the construction of colonial railroads in Nigeria, we find that the railway has large long-lasting impacts on individual and local development in the North, but virtually no impact in the South neither in the short run nor in the long run. This heterogeneous impact of the railway can be accounted for by the level of pre-railway access to ports of export. Consistent with Fogel's argument, the railway did not transform areas that had viable transportation alternatives for exporting purposes. Using information on changes in shipping costs and quantities, we highlight the importance of opportunity costs to the adoption and impact of new transportation investments.
    Keywords: Fogel's Hypothesis, Colonial Investments, Railway, Africa, Development, Nigeria
    JEL: J0 J00 N0 N00 N7 N77 N9 O1
    Date: 2016–11–25
  12. By: Clifford Bekar; Kenneth Carlaw; Richard Lipsey (Simon Fraser University)
    Abstract: Distinguishing characteristics of GPTs are identified and definitions discussed. We propose a definition that includes many multipurpose and single-purpose technologies and that uses micro-technological characteristics not macro-economic effects. Identifying GPTs requires recognition that they evolve continually and that there are always boundary uncertainties concerning particular items. We consider existing ‘tests’ of whether particular technologies are GPTs, arguing that many of these are based on misunderstandings, either of what GPT theory predicts or of what such tests can establish. The evolution of formal GPT theories is outlined, showing that only the early theories predicted the inevitability of GPT-induced showdown and surges. More recent GPT models, that are designed to model GPT’s characteristics, demonstrate that GPT theory does not imply the necessity of specific macro effects. We then show how GPTs can rejuvenate the growth process without causing slowdowns or surges. We conclude that the concept is helpful, while the criticisms can be resolved.
    Keywords: General Purpose Technologies, technological change, patents, slowdowns, surges, growth theories, productivity
    JEL: N00 O30 O33 O40 O41
    Date: 2016–11
  13. By: Ramon Lopez; Vinod Thomas; Pablo Troncoso
    Abstract: This paper analyzes the association between climate change variables and the incidence of intense hydro meteorological disasters within a framework that include global and local climate variables as well as socio-economic factors that aggravate disasters. We have shown that atmospheric carbon dioxide accumulation significantly increases hydro meteorological disasters and that the losses of human capital caused by such disasters induce significant negative effects on the rate of economic growth. A distinctive feature of this research is that the statistical-econometric analysis used considers all reported significant climate-related disasters during the period 1970-2013 in 184 countries, instead of focusing merely on selected disasters, periods or countries as most previous research has done.
    Date: 2016–11
  14. By: Zlatko Nikoloski
    Abstract: This paper studies the relationship between democracy andincome inequality in long- and short/medium-run. Using appropriate econometrictechniques on both, averaged and panel data for the period 1962-2006, we findno evidence that democracy is associated with tighter income distribution. Ourresults are robust to different specification techniques, to exclusion ofdeveloped as well as the transition countries. We speculate that the different(and opposing) transmission mechanisms, as well as the nature and thedefinition of the democracy variables (both Polity IV and Freedom House)influence our results. Improvement of conceptualization and measurement of democracycould shed further light onto the democracy-inequality nexus.
    Keywords: democracy; income inequality; political economy; economic development; developing countries; World
    JEL: F54 O15 O47
    Date: 2015
  15. By: Randall Morck; Masao Nakamura
    Abstract: Japan’s successful industrialization in the late 19th and early 20th century largely exhausted its then abundant natural resources. Rather than exemplifying rapid development in the absence of natural resources, Japan shows how laissez-faire government and successfully transplanted classical liberal institutions, including active stock markets, exorcised a natural resources curse that undermined its prior state-led industrialization strategy. Japan’s post-WWII reconstruction relied little on natural resources and more on bank financing and state direction, but was not an example of an initial industrialization
    JEL: G3 N25 O14 O53 P28
    Date: 2016–11

This nep-gro issue is ©2016 by Marc Klemp. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.