nep-gro New Economics Papers
on Economic Growth
Issue of 2018‒10‒15
thirteen papers chosen by
Marc Klemp
University of Copenhagen

  1. Innovation growth clusters: Lessons from the industrial revolution By DUDLEY, Leonard; RAUH, Christopher
  2. The French Curse? On the Puzzling Economic Consequences of French Colonization By Bergh, Andreas; Fink, Günther
  3. Exits from the Poverty Trap and Growth Accelerations in a Dual Economy Model By Jean-Claude Berthélemy
  4. The effects of prudential regulation, financial development and financial openness on economic growth By Pierre-Richard Agénor; Leonardo Gambacorta; Enisse Kharroubi; Enisse Kharroubi
  5. Growth Accelerations, Structural Change and Poverty Reduction in Africa By Jean-Claude BERTHELEMY
  6. Coordination Frictions and Economic Growth By Miroslav Gabrovski
  7. The impact of uncertainty in agriculture By GODEFROY, Raphaël; LEWIS, Joshua
  8. Two stories, one fate: Age-heaping and literacy in Spain, 1877-1930 By Francisco J. Beltrán Tapia; Alfonso Díez-Minguela; Julio Martinez-Galarraga; Daniel A. Tirado-Fabregat
  9. Innovation and Inequality: World Evidence By Benos, Nikos; Tsiachtsiras, Georgios
  10. Pollution, carrying capacity and the Allee effect By Stefano BOSI; David DESMARCHELIER
  11. "Universities, spillovers and the resilience of inequality in the human-capital century" By Alexandra López Cermeño
  12. Two Worlds of Female Labour: Gender Wage Inequality in Western Europe, 1300-1800 By Alexandra M. de Pleijt; Jan Luiten van Zanden
  13. Decomposing Economic Inequality in Early Modern Venice (ca. 1650-1800) By Edoardo Demo; Roberto Ricciuti; Mattia Viale

  1. By: DUDLEY, Leonard; RAUH, Christopher
    Abstract: Over three centuries ago, a new technology suddenly increased the amount and frequency of available information. Might such «Big Data» have disrupted the causal relationships linking economic growth and innovation? Previous research has affirmed that a society’s economic success during the Industrial Revolution depended on its institutions. Here we examine the hypothesis that by allowing people to cooperate more easily with one another, language standardization raised a society’s rate of innovation. As a result, the region could attract the resources needed to grow more rapidly. Empirical tests with 117 innovations and 251 Western cities suggest that the presence of a standardized tongue helps to explain the burst of innovation and growth observed between 1700 and 1850. Moreover, once one has accounted for language standardization, institutional quality has little further power to explain economic progress.
    Date: 2018
  2. By: Bergh, Andreas (Department of Economics); Fink, Günther (Swiss Tropical and Public Health Institute)
    Abstract: More than 50 years after independence, the majority of countries in Sub-Saharan Africa remain poor with limited rates of economic growth. One of the most striking features of economic development on the sub-Saharan subcontinent is the remarkably poor performance of French colonies relative to British ones. While British and French colonies had similar GDP per capita shortly after independence, their economic trajectories have increasingly diverged, with particularly large gaps in the post-2000 period. Neither measures of human capital, geography nor measures of institutional quality appear to explain this gap, suggesting that colonialism affected deeper societal factors that are crucial for economic growth but that are not captured in standard macroeconomic variables.
    Keywords: Growth; Development; Colonies; Institutions
    JEL: F54 O43
    Date: 2018–09–25
  3. By: Jean-Claude Berthélemy (FERDI - Fondation pour les Etudes et Recherches sur le Développement International, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: We propose a simple theoretical dual economy model to study the dynamics of an economy in which individuals move out of a poverty trap. These dynamics are characterized by growth acceleration. This model implies that poverty reduction could, under some circumstances, cause growth, rather than the other way around. We define a measurement of the growth impulse that could be triggered by independent exits from poverty and correlate it with observed growth accelerations. This correlation is both positive and significant, and it passes various robustness checks. .
    Keywords: Growth acceleration,poverty trap,poverty reduction
    Date: 2018–09–25
  4. By: Pierre-Richard Agénor; Leonardo Gambacorta; Enisse Kharroubi; Enisse Kharroubi
    Abstract: This paper studies the effects of prudential regulation, financial development, and financial openness on economic growth. Using both existing models and a new OLG framework with banking and prudential regulation in the form of capital requirements, the first part presents an analytical review of the various channels through which prudential regulation can affect growth. The second part provides a reduced-form empirical analysis, based on panel regressions for a sample of 64 advanced and developing economies. The results show that growth may be promoted by prudential policies whose goal is to mitigate financial risks to the economy. At the same time, financial openness tends to reduce the growth benefits of these policies, possibly because of either greater opportunities to borrow abroad or increased scope for cross-border leakages in regulation.
    Keywords: economic growth, prudential regulation, financial development, financial openness
    JEL: E44 G28 O41
    Date: 2018–10
  5. By: Jean-Claude BERTHELEMY
    Abstract: This paper proposes an assessment of African countries’ growth patterns through the identification of acceleration episodes. About two-thirds of African countries have experienced at least one growth acceleration episode since the 1950s. In some cases, accelerations hardly contributed to long-term growth, as they led or lagged a crisis episode, but in most cases, which we define as growth spike episodes, growth accelerations have directly determined the long-run pattern of growth. Hence studying these growth spike episodes specifically contributes to better understanding of African growth performance. We observe several cases of multiple growth spikes, similar to what has been observed in emerging economies. Growth spike episodes are generally associated with substantial total factor productivity gains. They are also associated with reduction of dualism through sectorial reallocation of labour from low-productivity sectors to high-productivity sectors. Growth spikes are additionally associated with poverty reduction, but we challenge the conventional wisdom that growth causes poverty reduction. In several cases, data on income distribution observed during the growth spike episodes are more consistent with the reverse causation, with poverty reduction causing economic growth. The paper concludes with a policy discussion that emphasizes the necessity of building a pro-poor and shared growth strategy.
    Date: 2018–06
  6. By: Miroslav Gabrovski (University of Hawaii at Manoa)
    Abstract: In practice, firms face a mass of scarce innovation projects. They choose one research avenue towards which to direct their effort, but do not coordinate these choices. This gives rise to coordination frictions. This paper develops an expanding-variety growth model to study the impact of these frictions on the economy. The coordination failure generates a mass of foregone innovation and reduces the economy-wide research intensity. Both effects decrease the growth rate. Because of this, the frictions also amplify the fraction of wasteful simultaneous innovation. A calibration suggests the impact of coordination frictions on the growth rate and welfare is substantial.
    Keywords: Growth, Frictions, Coordination, Simultaneous Innovation, Search for Ideas
    JEL: O30 O31 O32 O33 O40
    Date: 2018–10
  7. By: GODEFROY, Raphaël; LEWIS, Joshua
    Abstract: Income uncertainty in the rural economy is widely considered an important impediment to growth in poor countries. This paper uses a rich dataset on productivity, land use, and output for 17 different crops across 500,000 plots of land in 87 countries to study the impact of uncertainty in the agricultural sector. The analysis relies on historical variability in crop productivity driven by local climatic conditions to estimate the impact of uncertainty on farmers’ land allocation. Applying a standard portfolio framework, we estimate that the incentive to diversify led to large losses in agricultural revenue. We adopt a spatial regression discontinuity approach that compares how national institutions affected agricultural outcomes near the borders of former British and French colonies in Africa. We find that farmers in former British colonies, which tended to adopt pro-private sector policies, adopted more advanced input technologies and achieved higher crop-specific returns. In contrast, farmers in former French colonies, which tended to devote more public resources to the agricultural sector, tolerated higher levels of uncertainty and adopted more specialized crop portfolios. These offsetting effects suggest that both a well-functioning market system along with public investments that reduce risk may be necessary to foster rural economic development.
    Date: 2018
  8. By: Francisco J. Beltrán Tapia (Norwegian University of Science and Technology); Alfonso Díez-Minguela (Universitat de València); Julio Martinez-Galarraga (Universitat de València); Daniel A. Tirado-Fabregat (Universitat de València)
    Abstract: This study looks at human capital in Spain during the early stages of modern economic growth. In order to do so, we have assembled a new dataset on ageheaping and literacy in Spain for both men and women between 1877 and 1930 based on six population censuses with information for 49 provinces. Our results show that age-heaping was less prevalent during the second half of the 19th century than previously thought and did not increase until the early twentieth century. By contrast, literacy increased throughout the whole period. Interestingly, age-heaping and illiteracy rates depict similar spatial patterns which confirm the stark differences in human capital within Spain. Lastly, we raise critical questions as regards sources, methods, and the interpretation of age-heaping.
    Keywords: Spain, age-heaping, literacy, nineteenth-century
    JEL: I25 N9 O15 N01 I21
    Date: 2018–10
  9. By: Benos, Nikos; Tsiachtsiras, Georgios
    Abstract: In this paper we use country panel data to explore the effect of innovation on top income inequality. We construct a novel dataset of patents by combining patents from USPTO and EPO to test the effect of innovation on income inequality. We demonstrate that innovation has a strong positive correlation with top income shares. Also, we find weak evidence that innovation has a negative effect on overall income inequality. We support our findings by using instrumental variables to tackle endogeneity. In addition our IV analysis shows that the effect of innovation on top income shares remains significant for 3 years. Finally, we show that innovation has a less strong effect on top income inequality when we include defensive patents in the analysis.
    Keywords: top income inequality, overall inequality, innovation, citations, defensive patents
    JEL: D63 O30 O31 O33 O34 O40 O47
    Date: 2018–09–27
  10. By: Stefano BOSI; David DESMARCHELIER
    Abstract: In ecology, one of the simplest representation of population dynamics is the logistic equation. This basic view can be enriched by considering two important variables : (1) the maximal population density Nature cansupport (carrying capacity) and (2) the critical density threshold under which the population disappear (Allee effect). The economic literature on biodiversity and renewable resources ignores both these variables. Evidence suggests also that these variables are affected by the pollution leveldue to economic activity. Indeed, a degraded environment is unsuitablefor wildlife and reduces the carrying capacity, while the climate change entails the habitat fragmentation and, lowering the wildlife reproduction possibilities, raises the Allee effect. The present paper aims to incorporate both endogenous carrying capacity and Allee effect in a Ramsey model augmented with biodiversity as a renewable resource. Our extendedframework enables us to study the effect of a Pigouvian tax on anthropogenic mass extinction. We find that, when the household overvalues biodiversity with respect to consumption, a higher green-tax rate is beneficial in three respects entailing: (1) a lower pollution and a higher biodiversity, (2) a welfare improvement and (3) a less likely mass extinction.
    Keywords: Allea effect, carrying capacity, pollution, Ramsey model, logistic dynamics, Hopf bifurcation.
    JEL: E32 O44
    Date: 2018
  11. By: Alexandra López Cermeño (Lund University)
    Abstract: "This paper explores the impact of new universities established in the United States between 1930-2010. Differences in differences analysis on a sample of counties selected through propensity score matching enables the assessment of the impact of these universities on GDP, population, and different scales of market size. Evidence suggests that hosts of new universities grew around 20 per cent more, and the effect expanded to the nearby areas. Controlling for research quality and infrastructures shows that new cultural amenities generate growth that expands to nearby areas through the agglomeration of population but only during the short run."
    Keywords: "Economic Geography, Spillovers, Universities, United States"
    JEL: L8 N72 R12 I23
    Date: 2017–04
  12. By: Alexandra M. de Pleijt (University of Oxford, Department of Economics); Jan Luiten van Zanden (Utrecht University)
    Abstract: It is generally acknowledged that the degree to which women participate in labour markets and how they are remunerated are important determinants of female autonomy that may also affect their demographic behaviour. Such links have been discussed in the literature about the “European Marriage Pattern” (EMP). In order to bring about the conditions for female autonomy of the EMP (in which women have a large say in the decision when and with whom they marry), women should have had access to the labour market and have earned a decent wage. This is clearly affected by the gender wage gap and the possibility that women earn their own living and have the option to remain single. But so far no attempt has been made to compare the wages of women across Europe over the long run. In this paper we therefore provide evidence on the wages of unskilled women for seven European countries between 1300 and 1800. Our evidence shows that there were two worlds of female labour. In the South of Europe women earned about 50% of the wage of unskilled male labourers. In the Northern and Western parts of Europe this gap was much smaller during late Medieval Period, but it increased dramatically between about 1500 and 1800.
    Keywords: Living standards, labour market, gender inequality, pre-industrial development
    JEL: N13 N33 J16
    Date: 2018–10
  13. By: Edoardo Demo; Roberto Ricciuti; Mattia Viale
    Abstract: This article analyses trends in economic inequalities in Venice between the seventeenth and the eighteenth centuries. Based on largely unpublished archive sources, changes in income and consumption inequalities have been studied, while the bootstrap method was used to determine if these changes are statistically significant. The households studied were divided into subgroups to better understand the dynamics between and within the different population components. We show that changes in consumption inequality are significant, whereas those relating to income inequality are not. We argue that this is due to the inability of the economy to generate wealth, whereas families were better able to face the major structural changes in the European economy in the last two centuries of the early modern period.
    Keywords: consumption inequality, Early modern period, economic inequality, Little Divergence, Venice
    JEL: D31 N33 N93
    Date: 2018–10–08

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