nep-gro New Economics Papers
on Economic Growth
Issue of 2017‒07‒02
twelve papers chosen by
Marc Klemp
Brown University

  1. The Diffusion of New Institutions: Evidence from Renaissance Venice's Patent System By Comino, Stefano; Galasso, Alberto; Graziano, Clara
  3. Political Power, Resistance to Technological Change and Economic Development: Evidence from the 19th century Sweden By Tyrefors Hinnerich, Björn; Lindgren, Erik; Pettersson-Lidbom, Per
  4. Industrialization as a Deskilling Process? Steam Engines and Human Capital in XIXth Century France By Claude Diebolt; Charlotte Le Chapelain; Audrey-Rose Menard
  5. Time Preference and the Process of Civilization By Howden, David; Kampe, Joakim
  6. Heterogeneous Human Capital, Inequality and Growth: The Role of Patience and Skills By Kirill Borissov; Stefano Bosi; Thai Ha-Huy; Leonor Modesto
  7. What Was the Industrial Revolution? By Robert E. Lucas, Jr.
  8. Innovation and Inequality in a Small World By Ines Lindner; Holger Strulik
  9. Top income share and economic growth linear and non-linear effects By Charpe, Matthieu.
  10. Interest premium and economic growth: the case of CEE By Dániel Baksa; István Kónya
  11. The Long Run and Short Run Impacts of Exports on Economic Growth: Evidence from Gabon By Bakari, Sayef
  12. What explains Regional Imbalances in Infrastructure?: Evidence from Indian States. By Mohanty, Biswajit; Bhanumurthy, N. R.; Dastidar, Ananya Ghosh

  1. By: Comino, Stefano; Galasso, Alberto; Graziano, Clara
    Abstract: What factors affect the diffusion of new economic institutions? This paper examines this question exploiting the introduction of the first regularized patent system which appeared in the Venetian Republic in 1474. We begin by developing a model which links patenting activity of craft guilds with provisions in their statutes. The model predicts that guild statutes that are more effective at preventing outsider's entry and at mitigating price competition lead to less patenting. We test this prediction on a new dataset which combines detailed information on craft guilds and patents in the Venetian Republic during the Renaissance. We find a negative association between patenting activity and guild statutory norms which strongly restrict entry and price competition. We show that guilds which originated from medieval religious confraternities were more likely to regulate entry and competition, and that the effect on patenting is robust to instrumenting guild statutes with their quasi-exogenous religious origin. We also find that patenting was more widespread among guilds geographically distant from Venice, and among guilds in cities with lower political connection which we measure exploiting a new database on noble families and their marriages with members of the great council. Our analysis suggests that local economic and political conditions may have a substantial impact on the diffusion of new economic institutions.
    Keywords: Competition; Guilds; institutions; patents
    JEL: K23 O33 O34
    Date: 2017–06
  2. By: SERGI BASCO; John P. Tang
    Abstract: While credit supply growth is associated with exacerbating financial crises, its impact on general economic activity and long run development are unclear. To identify a causal impact, we use bond payments to samurai in nineteenth century Japan as a quasi-natural experiment and exploit variation between regions. Our proxy for credit supply, samurai population shares, is positively associated with per capita levels of firm establishment and capital investment and average firm capital. Initial samurai population share affects output per capita in the short and long run only in regions with early access to railways, mainly through the tertiary sector. Our interpretation is that increased credit supply may have a positive and persistent impact on output if a region has productivity-enhancing investment opportunities.
    Keywords: credit supply, finance-led growth, market access, railways
    JEL: E51 N15 O47
    Date: 2017–06
  3. By: Tyrefors Hinnerich, Björn (Research Institute of Industrial Economics (IFN)); Lindgren, Erik (Department of Economics, Stockholm University); Pettersson-Lidbom, Per (Research Institute of Industrial Economics (IFN))
    Abstract: This paper empirically tests the hypothesis that landed elites may block technological change and economic development if they fear that they will lose future political power (Acemoglu and Robinson (2002, 2006, and 2012). It exploits a plausible exogenous change in the distribution of political power of the landed elites, i.e., a Swedish suffrage reform in 1862 which extended the voting rights to industrialists at the local level. Importantly, the votes were also weighted according to taxes paid. Thus, the higher taxes paid the more votes received. As a result, the landed elites had an incentive to block industrialization and technological progress since they otherwise would be “political losers”. We find that the change in political power from the landed elites to industrialists, through the extension of suffrage rights, lead to more investments in railways, faster structural change, and higher firm productivity. We also find that the change of political power affected both labor coercion and the adaption of labor-saving technologies within the agriculture sector along the lines suggested by Acemoglu and Wolitzky (2011) and Acemoglu (2010). Specifically, we find that is more labor coercion and less investments in labor-saving technologies in areas were landowners have more political power. We also provide evidence that many demographic outcomes were affected by the change in political power. Moreover, we find strong evidence of persistence in both extractive economic and political institutions even after the weighted voting system was abolished and universal suffrage introduced in 1919. Specifically, local governments that were previously political controlled by the landed elites were still using both extractive economic and political institutions (Acemoglu and Robinson (2008)).
    Keywords: Economic development and growth; Political institutions; Technological change; Industrialization; Labor coercion; Labor-saving technologies; Persistence of extractive economic and political institutions
    JEL: E22 E23 E24 E62 F15 H41 H52 H53 H70 J10 J21 J22 J23 J24 J31 J32 J41 J43 J47 N10 N33 N53 N63 N73 N93 O10 O14 O15 O18 O33 O40 O52 R10 R42
    Date: 2017–06–21
  4. By: Claude Diebolt (BETA, University of Strasbourg Strasbourg, France); Charlotte Le Chapelain (CLHDPP-BETA, University Lyon III); Audrey-Rose Menard (LEMNA, University of Nantes)
    Date: 2017
  5. By: Howden, David; Kampe, Joakim
    Abstract: We begin with an admittedly simplistic statement: “civilization” is best represented by the increased availability of utility providing goods and services. In other words, civilization is synonymous with economic development. This paper concerns three questions. First, how does civilization develop? Second, what is time preference and how does it affect the development of civilization, or what we may call the “process of civilization.” Third, what factors affect time preference, and how do changes in time preference affect this civilizing process? Through these three questions, we provide the theoretical why civilization developed, instead of the more common historical how civilization actually developed.
    Keywords: time preference, interest rates, civilization
    JEL: O12 O19
    Date: 2016
  6. By: Kirill Borissov; Stefano Bosi; Thai Ha-Huy; Leonor Modesto
    Abstract: We extend the Lucas’ 1988 model introducing two classes of agents with heterogeneous skills, discount factors and initial human capital endowments. We consider two regimes according to the planner’s political constraints. In the meritocratic regime, the planner faces individual constraints. In the redistributive regime, the planner faces an aggregate constraint. We find that heterogeneity matters, particularly with redistribution. In the meritocratic regime, the optimal solution coincides with the BGP found by Lucas (1988) for the representative agent’s case. In contrast, in the redistribution case, the solution for time devoted to capital accumulation is never interior for both agents. Either the less talented agents do not accumulate human capital or the more skilled agents do not work. Moreover, social welfare under the redistribution regime is always higher than under meritocracy and it is optimal to exploit existing differences. Finally, we find that inequality in human capital distribution increases in time and that, in the long run, inequality always promotes growth.
    Keywords: Human capital, Heterogenous patience and skills, Inequality and growth
    JEL: J24 O15 O40
    Date: 2017–06–23
  7. By: Robert E. Lucas, Jr.
    Abstract: At some point in the first half of the 19th century per capita GDP in the United Kingdom and the United States began to grow at something like one to two percent per year and have continued to do so up to the present. Now incomes in many economies routinely grow at 2 percent per year and some grow at much higher “catch-up” rates. These events surely represent a historical watershed, separating a traditional world in which incomes of ordinary working people remained low and fairly stable over the centuries from a modern world where incomes increase for every new generation. This paper uses Gary Becker’s theory of a “quantity/quality trade-off,” consistent both with Malthusian population dynamics (quantity) and with demographic transition (quality), to identify a limited set of forces that were central to this revolution.
    JEL: N00 O11 O40
    Date: 2017–06
  8. By: Ines Lindner (VU Amsterdam and Tinbergen Institute, The Netherlands); Holger Strulik (University of Goettingen, Germany)
    Abstract: We present a multi-country theory of economic growth and R&D-driven technological progress in which countries are connected by a network of knowledge exchange. Technological progress in any country depends on the state of technology in 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 produces an extraordinary diversity of country growth performances, including the overtaking of individual countries and the replacement of the technologically leading country in the course of world development.
    Keywords: networks, knowledge diffusion, economic growth, world income distribution
    JEL: O10 O40 D85 F43
    Date: 2017–06–23
  9. By: Charpe, Matthieu.
    Abstract: Examines the empirical literature on inequality and growth, showing that the relationship is non-linear for different time periods. Suggests that inequality is more harmful in homogenous societies where inequality levels are low.
    Keywords: income distribution, economic development
    Date: 2017
  10. By: Dániel Baksa (Central European University and Center for Economic and Regional Studies); István Kónya (Center for Economic and Regional Studies and Central European University)
    Abstract: This paper views the growth and convergence process of the four Visegrad economies - the Czech Republic, Hungary, Poland and Slovakia - through the lens of the open economy, stochastic neoclassical growth model. We use a unified framework to understand both the long-run convergence path and fluctuations around it. Our empirical exercise highlights both the role of initial conditions such as indebtedness and capital intensity, and random shocks in the growth process. In particular, we explore the importance of the external interest rate premium, and its role in driving investment and the trade balance.
    Keywords: stochastic growth, technology shocks, interest premium, small open economy, Bayesian estimation.
    JEL: E13 O11 O41 O47
    Date: 2017
  11. By: Bakari, Sayef
    Abstract: This study investigates the impact of exports on economic growth in Gabon using annual time series data for the period 1980 - 2015 by implementing cointegration analysis and error correction model. The empirical results show that in the long run, investment and exports affect negatively on economic growth. However, in short run investment and export cause economic growth. These results provide evidence that investment and exports are necessary in Gabon's economy and are presented as an engine of growth since they cause economic growth in the short term. But they are not carried out and treated with a solid and fair manner, which offer new insights into Gabon’s openness policy for promoting economic growth.
    Keywords: Exports, Growth, Error-Correction, Openness policy, Gabon.
    JEL: F1 F11 F13 F14
    Date: 2017–06–18
  12. By: Mohanty, Biswajit (A.B. College, Bhadrak, Odisha); Bhanumurthy, N. R. (National Institute of Public Finance and Policy); Dastidar, Ananya Ghosh (University of Delhi)
    Abstract: The literature on regional growth suggests that divergences in infrastructure is a major factor behind the wide and persistent regional growth imbalances in India. Using a state infrastructure-expenditure function, the paper examines the possible factors that determine infrastructure expenditure and its implication for regional imbalance in infrastructure creation across 14 major Indian states. We, in the present study, find that factors such as resource mobilization, per capita income, and population density may result in unequal infrastructure expenditure across states. We also find that factors such as more spending by the infrastructure-deficit states, political stability, and positive spatial dependence in infrastructure expenditure among states have a balancing effect on infrastructure creation across regions. These results suggest the need for augmenting the financial capacity of the infrastructure-deficit states and strengthening the positive spatial dependence among states through creation of interstate infrastructure networks (railways, national highways etc.) and conducive investment climate, which could boost competition among states for better infrastructure creation.
    Keywords: infrastructure ; regional imbalance ; spatial dependence ; Indian states
    JEL: H54 R11 R12 C31
    Date: 2017–06

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