nep-gro New Economics Papers
on Economic Growth
Issue of 2017‒08‒27
fifteen papers chosen by
Marc Klemp
Brown University

  1. Industrial Development and Long-Run Prosperity By Raphaël Franck; Oded Galor
  2. Economic Origins of Cultural Norms: The Case of Animal Husbandry and Bastardy By Christoph Eder; Martin Halla
  3. Japan and the Great Divergence, 730-1874 By Bassino, Jean-Pascal; Broadberry, Stephen; Fukao, Kyoji; Gupta, Bishnupriya; Takashima, Masanori
  4. Rising Longevity, Fertility Dynamics, and R&D-based Growth By Koichi Futagami; Kunihiko Konishi
  5. Volatility and Economic Growth in the Twentieth Century By Mercedes Campi; Marco Due\~nas
  6. China, Europe and the Great Divergence: A Study in Historical National Accounting, 980-1850 By Broadberry, Stephen; Guan, Hanhui; Li, David Daokui
  7. Speed under Sail, 1750–1830 By Morgan Kelly; Cormac Ó Gráda
  8. Growing, Shrinking and Long Run Economic Performance: Historical Perspectives on Economic Development By Broadberry, Stephen; Wallis, John
  9. Technological Dynamism in a Stagnant Sector: Safety at Sea during the Early Industrial Revolution By Morgan Kelly; Cormac Ó Gráda
  10. Origins and Pathways of Innovation in the Third Industrial Revolution: Sweden, 1950-2013 By Taalbi, Josef
  11. Accounting for Growth in the Age of the Internet The Importance of Output-Saving Technical Change By Hulten, Charles R.; Nakamura, Leonard I.
  12. Education Quality and the Empirics of Economic Growth By Mauro Rodrigues; Danilo P. Souza
  13. Longevity and Lifetime Education: Global Evidence from 919 Surveys By Hoque, Mohammad Mainul; King, Elizabeth M.; Montenegro, Claudio M.; Orazem, Peter
  14. Crime, Transition, and Growth By Djumashev, Ratbek; Abdullaev, Bekzod
  15. Institutions and Economic Growth of Landlocked Nations – part of dissertation By Subarna Basnet

  1. By: Raphaël Franck; Oded Galor
    Abstract: This research explores the long-run effect of industrialization on the process of development. In contrast to conventional wisdom that views industrial development as a catalyst for economic growth, the study establishes that while the adoption of industrial technology was conducive to economic development in the short-run, it has had a detrimental effect on standards of living in the long-run. Exploiting exogenous geographic and climatic sources of regional variation in the diffusion and adoption of steam engines during the French industrial revolution, the research establishes that regions in which industrialization was more intensive experienced an increase in literacy rates more swiftly and generated higher income per capita in the subsequent decades. Nevertheless, intensive industrialization has had an adverse effect on income per capita, employment and equality by the turn of the 21st century. This adverse effect reflects neither higher unionization and wage rates nor trade protection, but rather underinvestment in human capital and lower employment in skilled-intensive occupations. These findings suggest that the characteristics that permitted the onset of industrialization, rather than the adoption of industrial technology per se, have been the source of prosperity among the currently developed economies that experienced an early industrialization. Thus, developing economies may benefit from the allocation of resources towards human capital formation rather than towards the promotion of industrial development.
    JEL: N33 N34 O14 O33
    Date: 2017–08
  2. By: Christoph Eder; Martin Halla
    Abstract: This paper explores the historical origins of the cultural norm regarding illegitimacy (formerly known as bastardy). We test the hypothesis that traditional agricultural production structures influenced the historical illegitimacy ratio, and have had a lasting effect until today. Based on data from the Austro-Hungarian Empire and modern Austria, we show that regions that focused on animal husbandry (as compared to crop farming) had significantly higher illegitimacy ratios in the past, and female descendants of these societies are still more likely to approve illegitimacy and give birth outside of marriage today. To establish causality, we exploit, within an IV approach, variation in the local agricultural suitability, which determined the historical dominance of animal husbandry. Since differences in the agricultural production structure are completely obsolete in today's economy, we suggest interpreting the persistence in revealed and stated preferences as a cultural norm. Complementary evidence from an `epidemiological approach' suggests that this norm is passed down through generations, and the family is the most important transmission channel. Our findings point to a more general phenomenon that cultural norms can be shaped by economic conditions, and may persist, even if economic conditions become irrelevant.
    Keywords: Cultural norms, persistence, animal husbandry, illegitimacy
    JEL: Z1 A13 J12 J13 J43 N33
    Date: 2017–08–16
  3. By: Bassino, Jean-Pascal (IAO, ENS de Lyon); Broadberry, Stephen (Nuffield College, Oxford); Fukao, Kyoji (Hitotsubashi University); Gupta, Bishnupriya (University of Warwick); Takashima, Masanori (Hitotsubashi University)
    Abstract: Japanese GDP per capita grew at an annual rate of 0.08 per cent between 730 and 1874, but the growth was episodic, with the increase in per capita income concentrated in two periods, 1450-1600 and after 1721, interspersed with periods of stable per capita income. There is a similarity here with the growth pattern of Britain. The first countries to achieve modern economic growth at opposite ends of Eurasia thus shared the experience of an early end to growth reversals. However, Japan started at a lower level than Britain and grew more slowly until the Meiji Restoration.
    Keywords: Japan, Great Divergence, GDP per capita, growth reversals, Britain JEL Classification: : N10, N30, N35, O10, O57
    Date: 2017
  4. By: Koichi Futagami (Graduate School of Economics, Osaka University); Kunihiko Konishi (Research Fellow of the Japan Society for the Promotion of Science (JSPS))
    Abstract: This study constructs an overlapping-generations model with endogenous fertility, mortality, and R&D activities. We demonstrate that the model explains the observed fertility dynamics of developed countries. When the level of per capita wage income is either low or high, an increase in such income raises the fertility rate. When the level of per capita wage income is in the middle, an increase in such income decreases the fertility rate. The model also predicts the observed relationship between population growth and innovative activity. At first, both the rates of population growth and technological progress increase, that is, there is a positive relationship. Thereafter, the rate of population growth decreases but the rate of technological progress increases, showing a negative relationship.
    Keywords: Fertility, Mortality, R&D
    JEL: D91 J13 O10
    Date: 2017–08
  5. By: Mercedes Campi; Marco Due\~nas
    Abstract: The twentieth century was a period of outstanding economic growth together with an unequal income distribution. This paper analyses the international distribution of growth rates and its dynamics during the twentieth century. We show that the whole century is characterized by a high heterogeneity in the distribution of GDP per capita growth rates, which is reflected in different shapes and a persistent asymmetry of the distributions at the regional level and for countries of different development levels. We find that in the context of the global conflicts that characterized the first half of the twentieth century and involved mainly large economies, the well-known negative scale relation between volatility and size of countries is not significant. After the year 1956, a redistribution of volatility leads to a significant negative scale-relation, which has been recently considered as a robust feature of the evolution of economic organizations. Our results contribute with more empirical facts that call the attention to traditional macroeconomic theories to better explain the underlying complexity of the growth process and sheds light on its historical evolution.
    Date: 2017–08
  6. By: Broadberry, Stephen (Nuffield College, Oxford); Guan, Hanhui (Peking University); Li, David Daokui (Tsinghua University)
    Abstract: Chinese GDP per capita fluctuated at a high level during the Northern Song and Ming dynasties before trending downwards during the Qing dynasty. China led the world in living standards during the Northern Song dynasty, but had fallen behind Italy by 1300. At this stage, it is possible that parts of China were still on a par with the richest parts of Europe, but by 1750 the gap was too large to be bridged by regional variation within China and the Great Divergence had already begun before the Industrial Revolution.
    Keywords: GDP Per Capita; Economic Growth; Great Divergence; China; Europe JEL Classification: E100, N350, O100
    Date: 2017
  7. By: Morgan Kelly; Cormac Ó Gráda
    Abstract: We measure technological progress in oceanic shipping directly by using a large database of daily log entries from ships of the British and Dutch East India Companies and Navies to estimate daily sailing speed in different wind conditions from 1750 to 1850. Against the consensus among economic (but not maritime) historians that the technology of sailing shipswas static during this time, we find that average sailing speeds of British ships in moderate to strong winds rose by nearly a third. Driving this steady progress seems to be continuous evolution of sails and rigging, and improved hulls that allowed a greater area of sail to be set safely in a given wind. By contrast, looking at every voyage between the Netherlands and East Indies undertaken by the Dutch East India Company from 1595 to 1795, we find that journey time fell only by 10 per cent, with no improvement in the heavy mortality, averaging six per cent per voyage, of those aboard.
    Keywords: Technological progress; Shipping
    JEL: N0
    Date: 2017–06
  8. By: Broadberry, Stephen (Nuffield College, Oxford); Wallis, John (University of Maryland)
    Abstract: Using annual data from the thirteenth century to the present, we show that improved long run economic performance has occurred primarily through a decline in the rate and frequency of shrinking, rather than through an increase in the rate of growing. Indeed, as economic performance has improved over time, the short run rate of growing has typically declined rather than increased. Most analysis of the process of economic development has hitherto focused on increasing the rate of growing. Here, we focus on understanding the forces making for a reduction in the rate of shrinking, drawing a distinction between proximate and ultimate factors. The main proximate factors considered are (1) structural change (2) technological change (3) demographic change and (4) the changing incidence of warfare. We conclude with a consideration of institutional change as the key ultimate factor behind the reduction in shrinking.
    Keywords: JEL Classification:
    Date: 2017
  9. By: Morgan Kelly; Cormac Ó Gráda
    Abstract: Against the consensus that sailing ship technology was stagnant during the early Industrial Revolution, we find striking improvements in safety at sea. Between 1760 and 1825, the risk of being wrecked for Atlantic shipping fell by one third, and of foundering by two thirds, reflecting improvements in seaworthiness and navigation respectively. Seaworthiness improved through replacing the traditional stepped deck ship with stronger flushed decked ones derived from Indian designs, and the increasing use of iron reinforcement. Improved navigation owed little to precise longitude estimation and stemmed mostly from accurate charts and instruments, and accessible manuals of navigational technique.
    Keywords: Technological progress; Shipping
    JEL: N0
    Date: 2017–06
  10. By: Taalbi, Josef (Department of Economic History, Lund University)
    Abstract: This study examines the factors that have shaped the long-term evolution of the ICT industry in Sweden, 1950-2013. Exploiting a new historical micro-database on actual innovation output, the driving forces and technological interdependencies in the third industrial revolution are chronicled. The results of this study support some stylized facts about innovational interdependencies in general-purpose technologies: a closely knitted set of industries have provided positive and negative driving forces for the development of ICT innovations. The historical evolution of the GPT surrounding microelectronics can in this perspective be described as a sequence of development blocks.
    Keywords: ICT; General-Purpose Technologies; Innovation Biographies; Network Analysis; Development Blocks
    JEL: L16 N14 O30
    Date: 2017–04–26
  11. By: Hulten, Charles R. (University of Maryland and NBER); Nakamura, Leonard I. (Federal Reserve Bank of Philadelphia)
    Abstract: We extend the conventional Solow growth accounting model to allow innovation to affect consumer welfare directly. Our model is based on Lancaster’s New Approach to Consumer Theory, in which there is a separate “consumption technology” that transforms the produced goods, measured at production cost, into utility. This technology can shift over time, allowing consumers to make more efficient use of each dollar of income. This is “output-saving” technical change, in contrast to the Solow TFP “resource-saving” technical change. One implication of our model is that living standards can rise at a greater rate than real GDP growth.
    Keywords: consumers; accounting; consumer welfare; GDP
    JEL: E01 O3 O4
    Date: 2017–07–31
  12. By: Mauro Rodrigues; Danilo P. Souza
    Abstract: We extend Mankiw, Romer and Weil's (1992) classic paper by introducing differences in education quality (proxied by students' performance on the PISA test). This substantially reduces the role of human capital investment rates in explaining cross-country income differences. More importantly, the coefficient on this variable is now consistent with microeconomic evidence on returns to education.
    Keywords: Education quality; human capital; cross-country income differences
    JEL: O47 E24 I25
    Date: 2017–08–16
  13. By: Hoque, Mohammad Mainul; King, Elizabeth M.; Montenegro, Claudio M.; Orazem, Peter
    Abstract: Data from 919 household surveys conducted between 1960 and 2012 spanning 147 countries are used to evaluate the relationship between rising life expectancy at birth and lifetime years of schooling for successive birth cohorts between 1905 and 1988. We find significant positive effects of increased life expectancy at birth on lifetime completed years of schooling in 95% of the surveys with significant negative effects found in only 2.3%.Rising life expectancy at birth for a birth cohort has intergenerational benefits in that their children’s schooling also increases. Rising life expectancy at birth since 1905 can explain 70% of the rising completed years of schooling for those birth cohorts.
    Date: 2017–08–11
  14. By: Djumashev, Ratbek; Abdullaev, Bekzod
    Abstract: This paper analyses whether the effect of crime on growth depends on the structural changes caused by transition. The result of the simple model suggests that when the structure of economy changes, the cost of economically motivated crime will also change; thus, affecting the impact of crime on economic performance. Using data for some of the republics of the former Soviet Union, we find support for this conjecture.
    Keywords: growth, crime, transition economies
    JEL: O17 O57 P26 P52
    Date: 2017–08–17
  15. By: Subarna Basnet
    Abstract: The study tries to scratch the relationship between institutions and economic growth under the landlocked constraint through empirically growing correlated random effect model with the base of pooled ordinary least square model and supporting models of fixed and random effect model. It includes a balance panel of 134 nations for 16 periods (2144 observations). It concludes that both landlocked and institutions are important variables to increase the output of the country. Landlocked nation decreases economic growth by 36% than no-landlocked nations, but the estimation of remoteness from the center to nearest sea becomes insignificance. Similarly, one standard deviation increase in nine institutional variables individually, out of the seventeen variables, estimates ranges from 3%-9% increase in a standard deviation of the dependent variable gross domestic product per capita.
    Date: 2017–08

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